Extreme Weather Events Differentially Impact Retail Food Prices: Evidence from Early Warning Systems

Abstract

This study aims to study the sensitivity of retail food prices to a suite of extreme weather events including floods, droughts, storms, heatwaves, and coldwaves. We hypothesize that extreme weather events are associated with higher retail prices of perishable food groups due to higher transportation and storage costs.Monthly retail prices for 2000–2021 were extracted from the FAO Global Information and Early Warning System, the USAID Famine Early Warning System Network, and the WFP Vulnerability Analysis and Mapping database. All local currency units were adjusted to 2017 USD. Foods were assigned to one of eight categories and matched to food composition tables to derive units of 2017 USD/1000 kg and 2017 USD/1000 kCal as purchased. Gridded data were spatially matched to each market location and month of price observation. Temperature anomalies were extracted from the Terraclimate dataset using thresholds of 2 SD and −2 SD to define heatwave and coldwave respectively. Tropical cyclones were extracted from the International Best Track Archive for Climate Stewardship database using a minimum of at least one Category 3 event in the month of observation. Standardized Evapotranspiration Index values of −1.5 and 1.5 were used to define Drought and Flood conditions respectively. OLS regressions with fixed effects for market-region, market-month, and market-year were implemented. All effects were studied with respect to a reference category of Breads and Cereals. Additional covariates included average temperature, precipitation, and vegetation.1,346,513 observations from 2321 markets in 71 countries were included in this analysis. Heterogenous effects are observed across extreme events and food groups. Notably, storms are associated with a 26% increase of adjusted prices for Fruits and Vegetables and a 11% increase in adjusted prices of Pulses Nuts and Seeds indicating critical supply reductions.Extreme weather events differentially impact perishable and non-perishable foods. Observed effects can inform nutrition-sensitive planning for climate adaptation and mitigation.This work was partially funded by the Feed the Future Innovation Lab for Sustainable Intensification through the United States Agency for International Development under Cooperative Agreement No. 720‐OAA‐18‐LA‐003 AID-OAA-L-14–00,006.