Climate change and agricultural commodity prices: a dynamic computable general equilibrium modeling

Purpose The main objective of the paper is to examine the effect of climate change on Nigeria's agricultural commodity prices from 2023 to 2032. Design/methodology/approach The dynamic computable general equilibrium (DCGE) model is employed to investigate the variables of interest. Findings The study finds that climate change exerts a positive influence on agricultural commodity prices in Nigeria. This suggests that climate change, which is anticipated to result from the untamed drive towards economic expansion would have positive agricultural commodity price effect in Nigeria. Premised on these findings, we recommended that the government should expand adaptation and resilience initiatives to mitigate the adverse effects of climate change on farmers, fisherfolk and other agricultural commodity producers and consumers. Additionally, transitioning from practices that emit higher levels of greenhouse gases to more sustainable methods of production and consumption is crucial. Research limitations/implications Climatic drivers were limited to precipitation and temperature and thus environmental issues (e.g. heatwaves, storms, sea level, harmattan wind extremes and flooding) were not revealed in the study. Originality/value The key contribution is utilizing a recursive DCGE model to scrutinize the seeming climate-economy nexus in Nigeria. The previous research on the variable of interest utilized conventional econometric techniques. However, these econometric techniques are not suitable for long-term analyses of the economic impact of climate change, as they fail to account for growth effects, accumulation effects, or the transition path of the economy, where short-term and medium-term impacts may diverge significantly (Adenikinju and Chitiga, 2009). Furthermore, the utilization of a recursive DCGE model explicitly integrates climate change into Nigeria's Social Accounting Matrix, resulting in a more precise representation of the relation between climate change and food prices.