Exporters’ behaviour in the face of climate volatility

Résumé

This paper investigates how exporters adjust trade margins to demand shocks and climate-induced production volatility. Combining French wine export data (113 PDOs, 49 destinations, 2001–2020) with high-resolution weather records, we estimate theory-consistent structural gravity models using instrumental variables that exploit exogenous variation in extreme temperatures. Production volatility significantly reduces export volumes, while demand shocks shape market allocation. A heterogeneity shows that exporters absorb production shocks by reallocating supply across markets, protecting volumes in core destinations while curtailing shipments to less profitable peripheral ones. A theoretical model of risk-averse heterogeneous firms rationalizes these findings through scale, redeployment, and selection effects driving export reallocation under climate risk.

Mots-clés

Climate Change; Cost shocks; Demand shocks; Gravity model; Heterogeneous Firms.;

Codes JEL

F12: Models of Trade with Imperfect Competition and Scale Economies • Fragmentation
F18: Trade and Environment
Q18: Agricultural Policy • Food Policy
Q56: Environment and Development • Environment and Trade • Sustainability • Environmental Accounts and Accounting • Environmental Equity • Population Growth