Climate change increases bilateral trade costs

Climate change increases bilateral trade costs | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Social Sciences - Article Climate change increases bilateral trade costs Maximilian Huppertz This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8594382/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract It is well established that climate change affects productivity, but its effects on trade costs have not been studied. I combine international trade and weather data covering 190 years. I use an augmented gravity framework to show that rising temperatures at the origin or destination country increase bilateral trade costs. Adaptation to these impacts is slow. The impact appears to be driven by the vulnerability of sea ports to climate change. Combining these results with a standard international trade model, I find that 2010s welfare would increase by 1.6 percent if we could undo the impact of climate change on trade cost over the preceding 100 years. Welfare gains depend not only on countries' own climate trends, but also on their neighbors' trajectories. Poor and rich countries are roughly equally harmed. Smaller economies, which are more reliant on international trade, are especially affected. Ignoring this trade cost channel and focusing only on productivity effects leads to a nine percent underestimate of the welfare impact of climate change. Because it is based on a gravity framework, my methodology can easily be embedded in studies of the impact of climate change. Scientific community and society/Social sciences/Economics Earth and environmental sciences/Climate sciences/Climate change/Climate-change impacts Full Text Additional Declarations There is NO Competing Interest. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8594382","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Social Sciences - Article","associatedPublications":[],"authors":[{"id":574812927,"identity":"cbf81f5d-75d7-4684-85fe-257523f99312","order_by":0,"name":"Maximilian Huppertz","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAAs0lEQVRIiWNgGAWjYFACHhBhA8SMjQdI0ZIG0tJAkpbDYCZxWnRn5B6TLtxx3m5t+2GgLTU20QS1mJ05lyY988zt5G1nEoFajqXlNhDUcrzHTJq37Xay2QGgFsaGw0RoOcwD0nIu2ez8Q2K1QGw5YGd2g2hbzpwxtp55JjnB7AbQlgSi/HIjx/B24Q47e7Pz6Q8ffKixIawFBJgZGxgSwSoTiFEO02JPrOJRMApGwSgYgQAA5bdHQRb3ZCkAAAAASUVORK5CYII=","orcid":"https://orcid.org/0009-0005-9198-6702","institution":"Bank of England","correspondingAuthor":true,"prefix":"","firstName":"Maximilian","middleName":"","lastName":"Huppertz","suffix":""}],"badges":[],"createdAt":"2026-01-13 16:52:03","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-8594382/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-8594382/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":103930687,"identity":"e6d45d9a-eb06-4bf1-ab2b-b47de3dcd9ab","added_by":"auto","created_at":"2026-03-04 16:28:47","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":7057423,"visible":true,"origin":"","legend":"Article File","description":"","filename":"Manuscriptsubmission.pdf","url":"https://assets-eu.researchsquare.com/files/rs-8594382/v1_covered_c115613e-67d2-47af-9ee9-2a7d48e7d696.pdf"}],"financialInterests":"There is \u003cb\u003eNO\u003c/b\u003e Competing Interest.","formattedTitle":"Climate change increases bilateral trade costs","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"","lastPublishedDoi":"10.21203/rs.3.rs-8594382/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-8594382/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"It is well established that climate change affects productivity, but its effects on trade costs have not been studied. 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