Abstract:
Variations in weather and natural disasters pose significant challenge in agricultural production.
While there is extensive research on the general impact of climate change on agriculture, limited
attention has been given to the export performance of key agricultural commodities. Therefore,
this study attempts to fill this gap by using an empirically analysing the impact of weather
conditions and natural disasters on spice export from Sri Lanka, a major global spice exporter.
Using the Gravity Model approach, the analysis incorporated panel data from 12 primary spice
export destinations covering the period from 1999 to 2022. The findings revealed that weather
factors, such as deviations in annual precipitation and temperature, significantly reduced spice
exports. Additionlly, increasing frequency of extreme weather events, such as droughts, tsunamis,
aggravated these challenges. The analysis indicates that a 1°C increase in yearly maximum
temperature is associated with a 5.7% reduction in export value (p = 0.026), while a 1°C rise in
yearly minimum temperature leads to a 1.2% decline (p < 0.001). Precipitation anomalies
similarly disrupt trade flows: a 100 mm increase in annual precipitation corresponds to a 5%
decrease in export value (p < 0.001). Furthermore, droughts and tsunamis, identified through the
international disaster database and modelled as binary events, significantly amplified these
weather impacts. Drought reduces export value by 29.4% (p = 0.002), while tsunamis cause an
even greater 36.2% decline in exports (p = 0.002). These results highlighted the importance of
climate-resilient agricultural practices, enhancements to irrigation and post-harvest
infrastructure, implementation of early warning systems and establishment of financial safety
nets and crop insurance schemes to mitigate future impacts. Moreover, the study underscores the
need for policymakers to integrate climate adaptation strategies into trade policies to ensure that
Sri Lanka’s spice sector remains competitive in global markets.
