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T H E T R A D E A N D C L I MATE CH AN G E N EX US
food products designed to tackle COVID-19 must be targeted, proportionate, transparent, and temporary.8 These initiatives provide a base from which to move to multilateral coordination at the WTO—aimed at providing effective discipline on agricultural export restrictions to allow for greater certainty of agricultural trade in a climate-affected world.
Extreme weather events and trade Climate change is leading to more frequent and severe extreme weather events. According to the United Nations, climate-related disasters increased by 83 percent in the first two decades of the 21st century compared to the last two decades of the 20th century—from 3,656 to 6,681 events. Major floods have more than doubled; the number of severe storms has increased by 40 percent; and droughts, wildfires, and heat waves have become much more prevalent. Extreme weather-related shocks such as storms, floods, and droughts have wideranging implications for trade at the macro level and for sectors, products, and firms. Exports from, and imports to, the affected area will be directly affected during the crisis and in the aftermath if trade-related transport and logistics infrastructure has sustained significant damage. Longer-term adverse impacts on exports will result from loss of life and injury of employees as well as damage to the capital stock (buildings, machinery) and inventories of exporting firms. These effects will be compounded if exporting firms are unable to continue exporting because of the damage or the cancellation of contracts following inability to fulfill orders during the crisis and its aftermath. Countries exporting agricultural products will suffer severe damages if an extreme weather shock affects the planting or harvesting of their main crops. Imports are critical to immediate recovery from a natural disaster. Trade allows the crisis-induced shortage of supply in critical goods and services (food, medicines, emergency workers) to be met by imports from unaffected countries. During the reconstruction, imports provide access to the equipment, materials, and skills that are necessary to rebuild the capital stock and transport infrastructure. Although the immediate impacts of a climate disaster on economic activity are most apparent, the long-term impacts, particularly on development in lowincome countries, can be enormous. Given their limited resources and capacities, poorer countries tend to recover more slowly and more partially than richer countries—especially when the fiscal space limits the funds available for reconstruction. This situation is aggravated by the increasing likelihood of recurrent natural disasters disrupting the same economies, which will have profound long-term implications for population and migration, investment, and trade in those locations. The immediate impact of a natural disaster on trade often is a sharp decline in the trade balance as imports of food, raw materials, and reconstruction materials rise while exports fall. This deteriorating trade balance has longer-term implications for macroeconomic management. Yet short-term impacts can also have adverse long-term development outcomes. For example, if malnutrition increases during the crisis and children become stunted or if schools are closed for a significant period, a country’s longterm development will be jeopardized. When a cyclone, flood, or drought hits Mozambique, per capita food consumption drops by up to 30 percent—about 0.4 fewer meals per person per day. In Zambia, the drought that accompanied the 2015/16 El Niño season lowered affected households’ maize (corn) yields by
