Recent Release | 25 Mar 2022

Climate change and food prices in Southeast Asia

Macro Consulting Team

Oxford Economics

Southeast Asia’s climate has become warmer, wetter and more unpredictable over the past decade. Our bespoke analysis finds that these changes in weather conditions have had a significant impact on the cost of food production in levels terms and in increased food price volatility. Specifically, a 1% increase in temperature versus a year ago is found to increase food production costs by 0.5-0.8% across Southeast Asian economies, and extreme heat events in Thailand and Vietnam in recent years have driven price spikes of 5-6%. Climate futures in which temperatures rise fastest and weather volatility increases most have the potential to generate ever-faster food price growth and greater price spikes. More stable food prices are, therefore, one key incentive for governments in the region to do their part to help the world transition toward net zero.

But the sector’s intensive use of energy and logistics to produce and distribute food will mean the shift to low-carbon energy could also have major cost implications for the sector. So while prices may be more stable in a net-zero world, they will nevertheless face pressures from the transition. Fortunately, the government can explore a range of policy options to ease the cost of transition and mitigate the impact of food price volatility. These policy options encompass agricultural policy, energy efficiency, social policy, and trade and investment policies. Together with Food Industry Asia, Oxford Economics looks forward to developing this debate in the months and years ahead, building on the foundations presented in this report.

About the team

Our macro consulting team are world leaders in quantitative economic analysis, working with clients around the globe and across sectors to build models, forecast markets and evaluate interventions using state-of-the art techniques. Lead consultants on this project were:

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