Exporters’ behaviour in the face of climate volatility

Résumé

This study examines how exporters make export decisions when faced with production and demand shocks. Using a unique dataset of French wine shipments from 2001 to 2020 across 134 Protected Denomination of Origin (PDO) regions, and daily weather data from M´et´eo-France, we employ gravity estimations to show that extreme weather affects both trade intensive and extensive margins, while favorable weather boosts them. A heterogeneity analysis reveals that exports to core markets are less sensitive than peripheral markets to extreme weather, indicating market prioritization by exporters. Our theoretical analysis explains how climate-induced production shock volatility shapes export behavior, leading firms to reallocate resources to most attractive markets and streamline their destination markets portfolios by exiting less favorable ones.

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