Enhancing the resilience of global value chains to climate change: lessons from Covid-19

Jodie Keane, Laetitia Pettinotti and Maximiliano Mendez-Parra, September 2020

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The increase in global trade over recent decades through the expansion of production networks and the integration of newly industrialised economies within global value chains (GVCs) has contributed to unprecedented socioeconomic gains and reductions in poverty. But socioeconomic development’s reliance on fossil fuels has led to climate change and environmental damage, which ultimately leads to social and economic cost. The rise in global temperatures and associated impacts has and will continue to affect trade adversely. Trade within GVCs can be especially vulnerable as shocks can be transmitted instantaneously along supply chains, disproportionally affecting suppliers upstream in poorer countries.

Lockdown policies to limit the spread of Covid-19 may provide lessons for a global and simultaneous climate change impact: bringing to a standstill or drastically reducing supply through GVCs. While the global and sudden disruption the virus has caused is of a scale and immediacy that is greater than any currently experienced climate impact, there are nonetheless lessons to be learnt from the Covid-19-induced disruption for climate resilience, given projected abrupt changes in our climate.

Photo: Farmers sorting out tomatoes in Ethiopia. Stephan Bachenheimer / World Bank. Licence: (CC BY-NC-ND 2.0)