Food Policy in a Warming World

This paper studies how governments intervene in agricultural markets to reshape the economic consequences of climate extremes. We construct a global dataset of agricultural policies and extreme heat exposure by country and crop since 1980. Extreme heat shocks to domestic production lead to policies that assist consumers by lowering domestic food prices. This effect is persistent, primarily implemented via border policies, and stronger during election years. Shocks to foreign production induce the opposite response: policies that assist producers by raising prices. These findings can be rationalized by a model in which governments use agricultural policy to redistribute among domestic interest groups. Our estimates imply that policy responses stabilize prices in shocked markets, reducing losses to domestic consumers by 21% while increasing those to domestic producers and foreign consumers by 172% and 32%. Policy responses have regressive consequences, disproportionately harming poor and heat-exposed countries, and may increase projected losses from climate change.