Speaker Cheng Bi - Grey Swan Yields: The Evolving Probability of Extreme Global Yield Shocks
- Sponsor
- PERE (Program in Environmental and Resource Economics)
- Speaker
- Cheng Bi, PhD Student, Dept ACE, UIUC
- Views
- 11
- Originating Calendar
- ACE Seminars
Abstract:
Climate change is increasingly destabilizing global food systems by inducing agricultural yield shocks that can cause food price volatility, famine, political unrest, and migration. Simultaneous exposure of multiple major breadbaskets to extreme climatic events could exacerbate these impacts and lead to more severe systemic outcomes. This study adopts a Mixture Normal–Generalized Pareto Distribution (Normal-GPD) model and employ granular yield projections under climate change to characterize tail behavior, quantify extreme yield shocks, and analyze the chance of concurrent yield failures across global breadbaskets. Using corn as an example, we find that the magnitude of a once-in-ten-year negative global yield shock reaches approximately 6% under climate adaptation and 9% without adaptation by the end of the century, compared with only about 3% in a no-climate-change scenario. Our results also show that climate change increases the positive correlation of yield shocks across global breadbaskets.