Extreme weather events, agricultural productivity and inflation in Africa: does adaptive capacity play any significant role

What the paper says

This paper provides empirical econometric evidence by examining the linkages between extreme weather events, agricultural productivity and inflation in Africa. Afterwards, it investigates the moderating role of climate change adaptive capacity in the agricultural productivity and weather events nexus. The paper deploys the system generalised method of moments modelling strategy and the panel vector error correction model on 52 African economies from 1990-2017. The findings show that extreme weather events cause a decline in African agricultural productivity. Drought has a stronger tendency to cause a decrease in agricultural productivity than floods. Further, the results show that the adverse impact of extreme weather events on agricultural productivity is mitigated with relatively robust climate change adaptive capacities. Extreme weather events also positively correlate with headline inflation, while drought and flood positively correlate with food inflation. Further evidence based on the panel VECM suggests that there exists a bi-directional causality between extreme weather events and headline inflation in the long run. The paper suggests that African Governments may need to build climate-resilient economies by investing more in climate change adaptation mechanisms to boost their respective adaptive capacities against climate variabilities.