Does Climate Change Cause an Upsurge in Food Prices?

Area of Science:

• Environmental Economics
• Climate Change Economics
• Agricultural Economics

Background:

• Climate change presents significant economic challenges, particularly inflationary pressures in the food sector.
• Stable food prices are crucial for economic development and social cohesion.
• Nigeria faces food price volatility linked to environmental and economic factors.

Purpose of the Study:

• To analyze the complex relationship between climate change and food prices in Nigeria.
• To investigate the influence of various economic and environmental variables on food price dynamics.
• To identify the presence and drivers of the heatflation phenomenon in the Nigerian context.

Main Methods:

• Utilized non-linear and quantile-based econometric methods.
• Analyzed time-series data spanning from May 2008 to December 2020.
• Examined the dependence between food prices and climate variables (temperature) across different quantiles.

Main Results:

• Confirmed a time- and frequency-based dependence between food prices and climate change indicators.
• Found that temperature, oil prices, and monetary factors significantly influence food prices, especially at higher quantiles.
• Identified the heatflation phenomenon, where rising temperatures and agricultural challenges drive food price increases in Nigeria.

Conclusions:

• Nigeria experiences heatflation, linking climate change (temperature) to food price instability.
• Policy interventions must integrate environmental, agricultural, and monetary considerations for food price stabilization.
• A comprehensive national food security policy is essential for Nigeria's economic stability and social cohesion.