UCR School of Public Policy's video: Climate Change and the Revealed Comparative Advantage of Water

The consequence of climate change on the comparative advantages of nations is not obvious and deciphering the impacts of the future alteration of water endowments upon the ability to trade water-intensive products is even more challenging. The main issue is that endowment and use of such a resource vary widely across space such that a measure of the water availability to produce and export agricultural goods not based at the finest spatial scale may be too inaccurate to draw significant results. The current article tackles this issue by building a worldwide indicator of the water capability to export agricultural goods at the finest spatial scale (approximately 55 kilometers). With such a geographical disaggregation, it is possible to accurately account for the uneven spatial distribution of agronomic, hydrologic, and climatic conditions within countries. Trade elasticity of this indicator is then estimated through a structural gravity equation which allows to compute the revealed comparative advantage of water resources and to measure the change of trade flows from climate change. We find that while the effect of climate change on trade flows is relatively small at the country level, this global picture hides dramatic changes at the local level with an important spatial reallocation of agricultural production within countries. Speaker Bio: Charles Regnacq is currently a visiting postdoctoral scholar at the Water in the West program of the Stanford Woods Institute for the Environment (Stanford University). He holds a Master's degree and a Ph.D. in international trade theories and environmental economics with an emphasis on water resources management from the Université de Pau et des Pays de l'Adour in France. During his thesis, he collaborated extensively with Professor Ariel Dinar through a one year visiting at the University of California, Riverside on issues related to water markets in California. His main research areas are water resources management, environmental economics, institutional economics and international trade economics. By combining theoretical and empirical tools from these different fields, he seeks the optimal solutions for a more sustainable future.