Climate change related natural disasters can be devastating, but its challenges and losses can lead to trade opportunities for other countries. For example, countries that have experienced a disaster may need to import goods to support recovery efforts. Climate disasters can also create opportunities for trade in areas such as disaster response and recovery, renewable energy, and sustainable infrastructure.
In this DCU research collaboration, we examine the impact of climate risk on international trade with a particular focus on developed and developing countries. Using a large sample of 160 countries between 2006 and 2019, we find that climate disaster is positively associated with high international trade. An increase in the climate disaster index will lead to an increase of about 5.9% in imports as a proportion of GDP.
Our results imply that climate change and its associated natural disasters offer more trade opportunities for developed countries than developing countries, highlighting the climate injustices between the high and low climate change contributors.