Sandy Dall’erba and Andre Chagas
This project examines the growing threat of drought on Brazil’s wheat sector and its broader implications for food security and international trade. As climate change intensifies, Brazil is facing its worst drought in over 70 years, affecting nearly 60% of the country. While Brazil is a major producer of soybeans and corn, wheat—though less studied—is a vital staple and heavily imported, particularly from Argentina, the U.S., and Canada. In recent years, Brazil has increased domestic wheat cultivation in states like Paraná, Rio Grande do Sul, and Santa Catarina, recognizing wheat’s critical role in food systems.
This project investigates how droughts—both domestic and abroad—disrupt Brazil’s wheat yields and trade flows. It applies a novel endogenous network difference-in-differences (DID) method, developed by the project’s principal investigators, which goes beyond conventional DID models by capturing spillover effects in international trade networks. For instance, when a drought reduces wheat output in Brazil or its trade partners, it may alter global supply chains as countries seek alternative suppliers. Traditional methods miss such cascading effects, risking biased estimates and ineffective adaptation policy.
The project addresses this methodological gap by applying the network DID model to real-world trade data and climate shocks. It aims to quantify the direct and indirect impacts of drought on Brazil’s wheat production and imports, and to analyze adaptive responses by both Brazil and its trade partners. In doing so, the project aligns with the IPCC’s call for research on climate-induced agricultural change and global food system vulnerability.
The research is a collaboration between Professors Dall’erba (ACE, CREATE, University of Illinois Urbana- Champaign) and Chagas (Economics, NEREUS, University of São Paulo), building on a long-standing academic partnership between CREATE and NEREUS. It also provides hands-on interdisciplinary training for a graduate student, equipping the next generation of scholars with skills to analyze human- environment interactions under global change. All data and code will be made publicly available to support transparency, replication, and global collaboration. Sources include CEPII BACI trade data, FAO agricultural statistics, CMIP6 climate projections, and the EORA input-output database.
Ultimately, the study will inform more effective adaptation strategies to protect food security in Brazil and beyond. By identifying how climate shocks propagate through trade networks, it offers critical insights into the need for cooperative international responses, challenging inward-looking trade policies. As drought and other climate extremes become more frequent, the project’s findings will help shape robust, evidence-based approaches to resilient agricultural and trade systems worldwide.