How Far Does a Climate Shock Travel? Panama Canal to the US West Coast

• In Event:  Caring For and About Water: Quality, Flood Risk, and Equity

Abstract

Climate-induced disruptions in global trade routes have significant economic and environmental consequences. I establish the causal effect of a climate-induced disruption at a critical chokepoint on distant local air quality using a chained 2SLS model. Using the 2023 El Niño-induced drought at the Panama Canal as a natural experiment, I show that the resulting congestion increased maritime traffic at major US West Coast ports. Furthermore, using the estimated Panama Canal traffic as an instrument for West Coast port traffic, I find increased port traffic led to a significant degradation of local air quality. Especially, tankers have a greater marginal pollution impact than cargo vessels, increasing daily particulate matter (PM) concentrations by up to 43.7%. My findings illustrate how localized climatic shocks can propagate through global shipping networks, creating significant environmental externalities in distant locations and highlighting a novel form of network-transmitted vulnerability.

Author

• Phillip Sangwoo Lee, University of Southern California
  Presenting Author