Editing IPCC:AR6/WGII/Chapter-14 (section)

=== 14.5.8 Economic Activities and Sectors in North America ===

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Economic sectors highly reliant on climate, such as agriculture, tourism, fisheries and forestry, have higher levels of exposure and sensitivity ( ''high confidence'' ) and greater overall risk to climate change compared with other economic sectors such as mining, construction and manufacturing ( ''medium confidence'' ). However, the cascading nature of climate impacts related to trade (see Box 14.5), labour productivity ( [[#14.5.8.1.5|Section 14.5.8.1.5]] ) and infrastructure ( [[#14.5.8.1.2|Section 14.5.8.1.2]] ) means that there is no economic sector in North America that will be unaffected by climate change ( ''very high confidence'' ) (Figure 14.10). For Canada, this assessment is further supported by the Canadian Climate Assessment ( [[#Lemmen--2021|Lemmen et al., 2021]] ). The combined economies of Canada, Mexico and the USA represented ~28% of the global GDP in 2019, with the USA accounting for almost 90% of the total activity for North America ( [[#World%20Bank--2020|]] [[#World%20Bank--2020|World Bank, 2020]] a). The risks posed at different global warming levels (GWLs) for any given economic activity or sector are presented in Figure 14.10. By combining expert judgement with a systematic review of the literature for each sector, the information in Figure 14.10 represents a broader synthesis, especially for sectors with a smaller literature base and at higher GWLs. The assessment of the risks of climate change on tourism ( [[#14.5.7|Section 14.5.7]] ) and the interactions between sectors through trade (see Box 14.5) are discussed separately.

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'''Figure 14.10 |''' '''Burning ember of the relative risks to economic sectors in North America as a function of projected global mean surface temperature increase since pre-industrial times.''' Impacts on economic sectors include: '''(a)''' changing crop yield leading to economic loss for agriculture, '''(b)''' changes in the quality and quantity of timber yields, '''(c)''' reductions in season length and economic viability for tourism activities, '''(d)''' increased maintenance and reconstruction costs to transportation infrastructure, '''(e)''' changes in fisheries catch, '''(f)''' reduced productivity in mining and energy operations, (g) reduced labour productivity in outdoor construction and (h) increased maintenance and reconstruction costs to transportation systems. Risks to economic sectors and activities were sometimes assessed across all of North America (c, d), within specific regions (a, b) and for specific crops or species (a: corn and soybean, e: cod and pollock). The supporting literature and methods are provided in Supplementary Material (SM14.4).

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==== 14.5.8.1 Observed Impacts and Projected Risks of Climate Change ====

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===== 14.5.8.1.1 Agriculture, fisheries and forestry =====

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The wide range of observed and projected impacts of climate hazards on food and fibre in North America are documented in [[#14.5.4|Section 14.5.4]] (also see Chapter 5). Agriculture (US-NW: corn and soybeans), fisheries (cod and pollock) and forestry (Boreal Forest timber yield) are expected to experience substantial and widespread risks by 2°C of global warming above pre-industrial levels ( ''medium'' to ''high confidence'' ) (Figure 14.10). Economic models generally show economic losses in the agricultural sector across North America, especially at higher GWL ( [[#14.5.4|Section 14.5.4]] ; [[#EPA--2017|EPA, 2017]] ; [[#Boyd--2021|Boyd and Markandya, 2021]] ), although the effects in local economies, especially rural areas of the USA that are highly dependent on agriculture, will be substantial even at lower GWLs ( [[#Gowda--2018|Gowda et al., 2018]] ). Full evaluations of climate risks for forestry and fisheries are presented in Sections 14.5.1 and 14.5.4 (also see [[#14.6|Section 14.6]] ), respectively.

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===== 14.5.8.1.2 Transportation =====

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Transportation infrastructure, including roads, bridges, rail, air, sea and pipelines, are highly vulnerable to rising temperatures, SLR, weather extremes, changing ice conditions, permafrost degradation and flooding ( ''high confidence'' ), resulting in damage, disruption to operations, unsafe conditions and supply chain impacts (see Box 14.5; [[#Board--2008|Board and Council, 2008]] ; Natural Resources Conservation Service; [[#Andrey--2017|Andrey and Palko, 2017]] ; [[#Jacobs--2018|Jacobs et al., 2018]] ; [[#Lemmen--2021|Lemmen et al., 2021]] ). In the Mexican states of Veracruz, Tabasco, San Luis Potosí, Chiapas and Oaxaca, 105,000 infrastructure sites, mostly major connecting roads, were found to be at risk of flooding from tropical storms (De la Peña et al. 2018). Low water levels in the Great Lakes has severely impacted US grain transport ( [[#Attavanich--2013|Attavanich et al., 2013]] ). High-intensity rain events destroyed 1000 km of roads and washed out hundreds of bridges and culverts in 2013 resulting in an estimated 6 billion CAD (considering the 2013 CAD value) in damages and recovery costs in Alberta, Canada ( [[#Palko--2017|Palko and Lemmen, 2017]] ). In 2019, the rail line from Winnipeg to Churchill Manitoba, which is the only ground transportation to the community and to Canada’s only deep-water Arctic port, was reopened after being closed for over 2 years due to the cumulative effects of flooding, permafrost degradation and political challenges ( [[#Lin--2020|Lin et al., 2020]] ). In the USA, the number of heat-related train delays has increased ( [[#Bruzek--2013|Bruzek et al., 2013]] ; [[#Chinowsky--2019|Chinowsky et al., 2019]] ) and, by the end of the century, may cause economic losses of 25–45 billion USD (RCP4.5) or 35–60 billion USD (RCP8.5) ( [[#Chinowsky--2019|Chinowsky et al., 2019]] ). Sea ice reduction in the North American Arctic has led to a rapid increase in ship traffic ( [[#Huntington--2015|Huntington et al., 2015]] ; [[#Phillips--2016|Phillips, 2016]] ; [[#Pizzolato--2016|Pizzolato et al., 2016]] ; [[#Huntington--2021b|Huntington et al., 2021b]] ; [[#Li--2021|Li et al., 2021]] ) with cascading risks related to invasive species introduction, accident rates, black carbon emissions, underwater noise pollution for marine mammals and risks to subsistence harvesting activities in Indigenous communities ( [[#Ware--2014|Ware et al., 2014]] ; [[#Council%20of%20Canadian%20Academies--2016|Council of Canadian Academies, 2016]] ; Huntington, 2021; [[#Verna--2016|Verna et al., 2016]] ; [[#Chan--2019|Chan et al., 2019]] ).

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===== 14.5.8.1.3 Energy, oil and gas, and mining =====

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Climate change is increasing the demand for electric power for cooling and threatens existing power supply ( ''high confidence'' ) ( [[#14.5.5|Section 14.5.5]] ). Increased energy demand often occurs during peak energy usage and especially during heatwaves ( [[#Cruz--2013|Cruz and Krausmann, 2013]] ; [[#Leong--2015|Leong and Donner, 2015]] ). Cooling represented 74% of peak electricity demand in Philadelphia on a particularly hot day in July 2011 ( [[#Waite--2017|Waite et al., 2017]] ; [[#IEA--2018b|IEA, 2018b]] ). In Canada, warming temperatures are expected to reduce demand for heating by 18–33% and increase demand for cooling by 14–126% by 2070 compared with 1959–1989 and 1998–2014 baseline periods, respectively ( [[#Berardi--2020|Berardi and Jafarpur, 2020]] ). The effects on hydropower are uneven across the region with the potential for increases in capacity in Canada but declines of over 20% in Mexico (RCP4.5 and RCP8.5) ( [[#Turner--2017|Turner et al., 2017]] ). Electricity demand in the USA is projected to increase by 5.3% per degree Celsius rise in temperature ( [[#Hsiang--2017|Hsiang et al., 2017]] ). Energy infrastructure, such as drilling platforms, refineries and pipelines, and evacuation routes, are also increasingly vulnerable to higher sea levels, hurricanes, storm surges, mobile multi-year sea ice, erosion, inland flooding, wildfires and other climate-related changes ( [[#Zamuda--2018|Zamuda et al., 2018]] ).

Operational efficiency and human safety at mining and energy production sites is expected to be adversely affected by increases in extreme events ( [[#14.2|Section 14.2]] ), including storms, heavy rains, riverine flooding and wildfires ( ''high confidence'' ). General remoteness of many mining sites (especially in the North American Arctic) exacerbates risks related to emergency responses to extreme events such as wildfire ( ''medium confidence'' ). The 2016 Fort McMurray wildfire in Alberta, Canada, forced the evacuation of 88,000 people and the shutdown of mine operations. Damages were minimal because companies had undertaken proactive FireSmart interventions specifically developed for the industry (see Box 14.1; [[#Council%20of%20Canadian%20Academies--2019|Council of Canadian Academies, 2019]] ). Onshore oil field production in Tabasco, Mexico, which accounts for 16% of the country’s daily output, was interrupted by extensive flooding ( [[#Cruz--2013|Cruz and Krausmann, 2013]] ). Two-thirds of mine operators globally, including major operators in North America, have experienced production challenges related to water shortages and flooding ( [[#Carbon%20Disclosure%20Project--2013|Carbon Disclosure Project, 2013]] ). Water availability stress due to climate change is lower in Canada than in the USA and Mexico, and mines in Canada may be less exposed to this risk ( [[#World%20Resourcs%20Institute--2012|World Resourcs Institute, 2012]] ) with some exceptions, that is, water-intensive oil sands mining in the Athabasca River basin in Canada ( [[#14.5.3|Section 14.5.3]] ; [[#Leong--2016|Leong and Donner, 2016]] ).Warming temperatures also have the potential to alter the nature, characteristics and quality of mineral resources such as kaolin or limestone ( [[#Phillips--2016|Phillips, 2016]] ).

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===== 14.5.8.1.4 Construction =====

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In the USA, construction workers comprise 6% of the total workforce but accounted for 36% of all occupational heat-related deaths from 1992 to 2016 ( [[#Dong--2019|Dong et al., 2019]] ). It is expected that total labour hours among outdoor construction workers will decrease by 0.53% (±0.01%) per degree Celsius based on existing warming trends ( [[#Hsiang--2017|Hsiang et al., 2017]] ; also see [[#EPA--2017|EPA, 2017]] ). Risks are expected to be exacerbated as SLR and storm surge expands the risk zone for coastal flooding exposing more property to inundation and enhancing construction demand (see Box 14.4; [[#14.5.5.1.3|Section 14.5.5.1.3]] ; [[#EPA--2017|EPA, 2017]] ). Meeting existing and projected demand for water in affected regions could also require building new desalination plants. For example, Texas has constructed over 44 desalination plants across the state because of a lack of freshwater to meet potable water demand and due to climate-driven droughts ( [[#Kloesel--2018b|Kloesel et al., 2018b]] ). Other infrastructure damaged by floods and SLR will need to be reassessed and perhaps relocated away from the coast. Relocation requires availability of land that frequently does not exist within urban areas (Lithogow, 2019). Some US tribes and Indigenous groups in Canada lack the financial resources to build climate-resilient infrastructure, such as housing and sewage treatment facilities, to assure clean drinking water ( [[#Martínez--2014|Martínez et al., 2014]] ; Salgado and Luisa Martinez, 2017; [[#Lithgow--2019|Lithgow et al., 2019]] ).

Permafrost thaw in northern North America will result in increased construction and reconstruction needs ( ''medium confidence'' ) related to direct damage to buildings, roads, airport runways and other critical infrastructure including decreased bearing capacities of building and pipeline foundations, damage to road surfaces, and deterioration of reservoirs and impoundments used for wastewater and mine tailings containment ( [[#Pendakur--2017|Pendakur, 2017]] ; [[#Meredith--2019|Meredith et al., 2019]] ). Ice roads have become less safe due to warming, pavement damage has increased related to seasonal thaw–freeze cycles and there have been interruptions in airport operations, water and sewage service, and school operations in the Canadian territories of Yukon and Nunavut (Canadian Western and Eastern Arctic, i.e., CA-WA and CA-EA in Figure 14.1) ( [[#Council%20of%20Canadian%20Academies--2019|Council of Canadian Academies, 2019]] ). By the end of the century, the economic impact of projected reconstruction of Alaska’s public infrastructure due to climate change (mainly from permafrost thaw) is estimated to range from 4.2 billion USD (RCP4.5) to 5.5 billion USD (RCP8.5) ( [[#Melvin--2017|Melvin et al., 2017]] ; [[#Markon--2018|Markon et al., 2018]] ).

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===== 14.5.8.1.5 Manufacturing =====

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Twelve million Americans (Bureau of Labor Statistics, 2015), 1.5 million Canadians (Statistics Canada, 2020) and 9 million Mexicans (Statistics Mexico, 2021) are employed in manufacturing. The southeast USA and Texas have the highest manufacturing output, with 34% of total US output (700 billion USD yr –1 ). The impact of climate change on manufacturing varies greatly by region. Vulnerability of the sector to climate change stems from exposure of workers to increasing temperatures and humidity, exposure of facilities to SLR and flooding, and changes in water supply and quality required in many manufacturing processes ( [[#Lall--2018|Lall et al., 2018]] ).

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===== 14.5.8.1.6 Labour Productivity =====

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Climate change is negatively affecting working conditions and labour productivity in North America ( ''medium confidence'' ) ( [[#14.5.6.1|Section 14.5.6.1]] ; see Box 14.5) ''.'' Working conditions in temperatures above a heat index of 85°F (29.4°C) are correlated with potentially hazardous health conditions ( [[#Tustin--2018|Tustin et al., 2018]] ), and for every degree Celsius increase in temperature, labour productivity is estimated to be reduced by 0.11% for low-risk workers and 0.53% for high-risk workers (i.e., construction, mining, agriculture and manufacturing) ( [[#Hsiang--2017|Hsiang et al., 2017]] ). By mid-century (RCP8.5), temperature increase, changing water availability and SLR are projected to result in a 0.6% drop in labour productivity in auto, timber, textile and chemical manufacturing in the southeast and Texas regions ( [[#Kinniburgh--2015|Kinniburgh et al., 2015]] ; [[#Hsiang--2017|Hsiang et al., 2017]] ). Labour productivity in the US automobile industry decreases by 8% for every six or more days of consecutive unusually hot weather (above 90°F/32.2°C) ( [[#Cachon--2012|Cachon et al., 2012]] ). Thirty percent of California workers are employed in high-risk industries, such as agriculture, with exposure to high temperature leading to loss in productivity ( [[#Rogers--2015|Rogers et al., 2015]] ). Under RCP8.5 increases in extreme temperatures, labour productivity in the USA is projected to decrease, costing 190 billion USD in lost wages by 2090 ( [[#EPA--2017|EPA, 2017]] ; [[#Kjellstrom--2019|Kjellstrom et al., 2019]] ; also see [[#Gubernot--2014|Gubernot et al., 2014]] ; [[#Kiefer--2016|Kiefer et al., 2016]] ; [[#Carter--2018|Carter et al., 2018]] ).

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==== 14.5.8.2 Current and Potential Adaptation ====

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Adaptation options are highly diverse and sector specific ( [[#EPA--2017|EPA, 2017]] ). Regardless of economic sector, companies that implement effective and rapid response options that address climate change stressors will have a competitive advantage ( [[#Gasbarro--2016|Gasbarro et al., 2016]] , Lemmen, 2021). Most companies focus on short-term risk management and, consequently, short-term adaptation is often favoured over long-term approaches particularly in the private sector, which will be ineffective for climate-change risk reduction over the long term ( [[#Gasbarro--2016|Gasbarro et al., 2016]] ).

Investment and coordination of climate services (forecasting) can support many economic sectors across North America. In 2017, 15% of Standard and Poor’s (S&amp;P, US industry credit rating agency) 500 companies publicly disclosed an effect on earnings from weather events, reflecting a growing trend ( [[#Williams--2018|Williams et al., 2018]] ). Existing US federal-sponsored planning tools provide guidance to states and to plan for SLR and flooding with large threats to commercial sectors ( [[#US%20Department%20of%20Transportation--2015|US Department of Transportation, 2015]] ). The NOAA Coastal Services Center SLR and coastal inundation viewer 7 , [[#footnote-018|3]] the Army Corps of Engineers Sea Level Change Curve simulator, and Climate Central’s interactive portal (Ocean at the Door) all provide access to visualisations of future SLR that are available to US coastal cities and towns for commercial planning purposes. Similar resources are being developed and are available for Canada including Canada’s Climate Atlas 8 . [[#footnote-017|4]]

Adaptation options for transportation and related infrastructure include engineering and technological solutions, as well as innovative policy, planning, management and maintenance approaches ( [[#Natural%20Resources%20Conservation%20Service--2008|Natural Resources Conservation Service, 2008]] ; [[#Jacobs--2018|Jacobs et al., 2018]] ). For northern transportation, new technologies and infrastructure adaptations can be employed to facilitate heat extraction (e.g., air convection embankments, heat drains, thermosyphons, high albedo surfacing, gentle embankment slopes) ( [[#McGregor--2010b|McGregor et al., 2010b]] ; [[#United%20Nations--2020|United Nations, 2020]] ) Adaptation options for roads include changing pavement mixes to be more tolerant to heat or frost heaving, expanding drainage capacity, reducing flood risks, enhancing travel advisories and alerts, elevating or relocating new infrastructure where feasible and changing infrastructure design requirements to include climate-change considerations or to introduce new flood event thresholds ( [[#Natural%20Resources%20Conservation%20Service--2008|Natural Resources Conservation Service, 2008]] ; [[#EPA--2017|EPA, 2017]] ; [[#Pendakur--2017|Pendakur, 2017]] ). Railroads are testing temperature sensors on rail tracks to provide early warning of buckling. Sensors that signal when tracks are approaching dangerous temperatures may help to avoid accidents ( [[#Hodge--2014|Hodge et al., 2014]] ; [[#Chinowsky--2019|Chinowsky et al., 2019]] ).

Adapting building codes more uniformly to changing climate conditions, such as SLR, storms, winds and wildfires, reduces risk ( [[#Olsen--2015|Olsen, 2015]] ; [[#Maxwell--2018b|Maxwell et al., 2018b]] ). North America has not, on the whole, adapted its building code regulations to consider the dynamic challenges of climate change, although some specific efforts ''have'' been made, including the addition of requirements for wildfire within California’s building codes and Canada’s climate-resilient building and core public infrastructure initiative, which involves updating building codes and standards to improve climate resiliency (see Box 14.4; [[#Lacasse--2020|Lacasse et al., 2020]] ). To enhance safety, some outdoor workers have been fitted with heat sensors to analyse or assess how warming may affect productivity and well-being ( [[#Runkle--2019|Runkle et al., 2019]] ). Other options include raising public roads and seawalls, initiating buy-outs of property owners in flood risk areas and improving storm water drainage. Adopting approaches like the International Future Living Institute’s Living Building Challenge (LBC) may inform future regulatory processes ( [[#Eisenberg--2016|Eisenberg, 2016]] ). The LBC 9 [[#footnote-016|5]] has seven thematic areas that inform building design, although only a subset of those are relevant for climate change including water, energy and materials considerations.

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'''Box 14.5 | Climate-Change Impacts on Trade Affecting North America'''
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Trade, defined as the sum of exports and imports, accounts for 30% of North American GDP. Trade flows within North America are valued at $1.3 trillion USD annually (2019 dollars). Variations within the region are notable: Mexico relies on trade for 80% of its GDP and Canada for 66% ( [[#World%20Bank--2020|]] [[#World%20Bank--2020|World Bank, 2020]] a). Canada and the USA traded over 55.2 billion USD worth of products related to the agriculture industry between 2015 and 2018 ( [[#Government%20of%20Canada--2019|Government of Canada, 2019]] ). Canada, the USA and Mexico have the longest-running trade pacts globally and these agreements have played a major role in supporting economic and social development in the region (see ( [[#Frankel--2005|Frankel and Rose, 2005]] ; [[#Eaton--2016|Eaton et al., 2016]] ; [[#World%20Bank--2020|]] [[#World%20Bank--2020|World Bank, 2020]] b); however, recent changes to the North American Free Trade agreement do not clearly address climate change ( [[#Lucatello--2019|Lucatello, 2019]] ).

'''Climate risks may create shocks to the trade system by damaging infrastructure and disrupting supply chains in North America (''' '''''medium confidence''''' ''').''' Sea level rise, flooding, permafrost thaw, landslides and increased frequency and magnitude of extreme weather events are projected to impact transportation infrastructure which will pose challenges to the movement of goods, especially in coastal areas ( [[#Lantuit--2012|Lantuit et al., 2012]] ; [[#Doré--2016|Doré et al., 2016]] ; [[#Hjort--2018|Hjort et al., 2018]] ; [[#Koks--2019|Koks et al., 2019]] ; [[#Lemmen--2021|Lemmen et al., 2021]] ). Maritime ports are at the greatest risk from climate hazards ( [[#Messner--2013|Messner et al., 2013]] ; [[#Slack--2016|Slack and Comtois, 2016]] ), followed by roads, rail and airports ( [[#Anarde--2017|Anarde et al., 2017]] ). Due to the transnational nature of trade, extreme weather disruptions in one region are likely to lead to cascading effects in other regions ( ''high confidence'' ) ( [[#Lemmen--2021|Lemmen et al., 2021]] ). For example, climate change will have negative impacts for global food and energy trade where reductions in crop production and fish stocks in some regions could cause food and fish price spikes elsewhere (Figure 14.10; Sections 14.5.4 and 5.11.8; [[#Beaugrand--2015|Beaugrand et al., 2015]] ; [[#Lam--2016|Lam et al., 2016]] ; [[#IPCC--2019a|IPCC, 2019a]] ).

'''Climate-change impacts may alter current trade practices and patterns with implications for regional economic development in North America, especially in the Arctic (''' '''''medium confidence''''' ''').''' Climate change is causing modal shifts in cargo shipping. For example, lower water levels in lakes and rivers (e.g., Mackenzie River, Mississippi River) impact freight transport and may cause a shift from marine transport to more GHG-intensive rail, road or air transport ( [[#Koetse--2009|Koetse and Rietveld, 2009]] ; [[#Du--2017|Du et al., 2017]] ; [[#Pendakur--2017|Pendakur, 2017]] ). Sea ice change is creating new Arctic marine trade corridors ( [[#Melia--2016|Melia et al., 2016]] ; [[#Pizzolato--2016|Pizzolato et al., 2016]] ; [[#Ng--2018|Ng et al., 2018]] ; [[#Bennett--2020|Bennett et al., 2020]] ; [[#Mudryk--2021|Mudryk et al., 2021]] ), including shorter and potentially more economical routes such as the Northwest Passages (see Box [https://www.ipcc.ch/chapter/14#CCP6.1 CCP6.1] ). Warming temperatures have also reduced the season length for ice roads, which are heavily relied upon to service remote communities and remote industries including forestry and mining ( [[#14.5.8.1.2|Section 14.5.8.1.2]] ; [[#Pendakur--2017|Pendakur, 2017]] ).

'''Effective and equitable trade policies can act as important adaptation strategies (''' '''''medium confidence''''' ''').''' Higher temperatures have had no direct effect on developed countries’ exports, but have significantly reduced growth in exports among developing countries, which in turn can increase the price of goods that developed countries then import ( [[#Costinot--2016|Costinot et al., 2016]] ; [[#Constant--2019|Constant and Davin, 2019]] ). [[#Schenker--2013|Schenker (2013)]] estimated that the climate impacts on trade from developing to developed countries could be responsible for 16.4% of the total expected cost of climate change in the USA in 2100 and, thus, North America would benefit from increased investment in effective and equitable trade policies and adaptation in developing regions. Under an RCP8.5 scenario (~2.6–4.8°C warming) and within current trade integration, climate change could lead to up to 55 million undernourished people by 2050. These projections decrease by 64% (20 million people) with the introduction of reduced trade tariffs and the lessening of institutional and infrastructure barriers ( [[#Janssens--2020|Janssens et al., 2020]] ). Although most studies focus on global food security (i.e., agriculture), it is likely that the same challenges exist for other commodities and manufactured goods.

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