Assessing the influence of weather variability and natural disasters on Sri Lankan spice export: A gravity model approach

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.