Europe’s cross-border trade, human security and financial connections: A climate risk perspective

As an economy that is highly connected to other regions and countries of the world, the European Union (EU) is potentially exposed to cross-border impacts of climate change.

The authors conducted a large-scale review of the literature and data to explore the potential impact transmission pathways between the EU and other world regions and countries, i.e. the ways in which initial impact in the country of origin causes subsequent impacts elsewhere. They did this across three distinct domains of interest – trade (via international markets), human security (migration and other humanitarian and development concerns) and finance (flows of public/private capital). These are all part of complex socio-economic, political and cultural systems and may contribute to mediate or exacerbate risk exposure.

The authors sought to understand how much prior consideration there had been of the risk of cross-border impacts. They also provide quantitative evidence of the extent and strength of connectivity between the EU and other world regions.

The analysis reveals that – within this nascent area of research – there is uncertainty about the dynamics of cross-border impact. These uncertainties mean that it is not possible to accurately gauge whether the EU is in a relatively secure or vulnerable position in comparison with other regions. However, risk is likely to be focused in particular ‘hotspots’: places that produce materials for EU consumption (e.g. Latin American soybean), hold financial investments (e.g. North America), or are the foci for EU external action (e.g. the Middle East and North Africa region).

Importantly, these domains will also interact. Using a conceptual example of soybean production in Argentina based on a historical drought event, this paper illustrates that impact and response pathways linked to EU risk exposure may be complex. This further heightens the challenge of developing effective policy responses within an uncertain climatic and socioeconomic future.