Climate Shocks and Their Effects on Food Security, Prices, and Agricultural Wages in Afghanistan

This study examines the effects of climate and weather shocks on Afghanistan's agricultural economy, with an emphasis on food security, prices, and wages. By utilizing a dynamical model and a unique data set that includes monthly global and local food prices, agricultural wages, unofficial exchange rates, and local climate data, the research provides econometric estimates of the impacts of droughts and floods. The findings reveal that both flooding and drought significantly increase food insecurity, directly and indirectly. Directly, these climatic shocks are linked to heightened risks of food insecurity in the following months, even when controlling for price and wage fluctuations. Indirectly, droughts and floods drive up food prices and depress agricultural wages, further exacerbating food insecurity. The study suggests that enhancing climate resilience in the agriculture sector could mitigate these risks, stabilize local food prices and wages, and strengthen food security and the broader agricultural economy. The results also show that price data effectively capture food security shocks from various non-economic sources, and can serve as a versatile monitoring tool in situations where detailed data on food security are unavailable.