Abstract
This paper aims to analyze the impact of climate change on cotton production and processing. Using the panel data Vector autoregressive (VAR) model on a panel of 48 countries that are both producers and processors of cotton, the results show that Climate variability has a negative impact on cotton production and processing. In fact, 15% of the variation in production is due to variations in rainfall and 30% is due to variations in temperature. In addition, variations in cotton processing are similarly sensitive to climate variability, with 6% and 38% due to temperature and rainfall variations, respectively. At the same time, climate change has a negative impact on shocks to cotton production and processing, although these are more affected by variations in processing, estimated at 6% (12%), than by variations in temperature (rainfall). Moreover, the estimates by region (Africa, Asia, America, Europa) confirm the above-mentioned differential impacts, with the effects of temperature and rainfall variations being more pronounced in Africa and Asia.
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