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Climate change impacts and farm-level adaptation: Economic analysis of a mixed cropping–livestock system

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  • Thamo, Tas
  • Addai, Donkor
  • Pannell, David J.
  • Robertson, Michael J.
  • Thomas, Dean T.
  • Young, John M.

Abstract

The effects of climate change on agricultural profitability depend not just on changes in production, but also on how farming systems are adapted to suit the new climatic conditions. We investigated the interaction between production changes, adaptation and farm profits for a mixed livestock–cropping farming system in the Western Australian Wheatbelt. Crop and pasture production was simulated for a range of plausible rainfall, temperature and CO2 concentrations for 2030 and 2050. We incorporated the results of these simulations into a whole-farm bio-economic optimisation model. Across a range of climate scenarios, the impact on farm profit varied between −103% and +56% of current profitability in 2030, and −181% and +76% for 2050. In the majority of scenarios profitability decreased, and the magnitude of impacts in negative scenarios was greater than the upside in positive scenarios. Profit margins were much more sensitive to climate change than production levels (e.g., yields). Adaptive changes to farm production under extreme climate scenarios included reductions in crop inputs and animal numbers and, to a lesser extent, land-use change. The whole-farm benefits of these adaptations were up to $176,000/year, demonstrating that estimating the impact of climate change without allowing for adaptation can substantially inflate costs. However, even with adaptation, profit reductions under the more negative scenarios remained large. Nevertheless, except for the most extreme/adverse circumstances, relatively minor increases in yields or prices would be sufficient to counteract the financial impacts of climate change (although if these price and/or productivity increases would also have occurred without climate change then the actual cost of climate change may still be high).

Suggested Citation

  • Thamo, Tas & Addai, Donkor & Pannell, David J. & Robertson, Michael J. & Thomas, Dean T. & Young, John M., 2017. "Climate change impacts and farm-level adaptation: Economic analysis of a mixed cropping–livestock system," Agricultural Systems, Elsevier, vol. 150(C), pages 99-108.
  • Handle: RePEc:eee:agisys:v:150:y:2017:i:c:p:99-108
    DOI: 10.1016/j.agsy.2016.10.013
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    References listed on IDEAS

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    1. Michele John & David Pannell & Ross Kingwell, 2005. "Climate Change and the Economics of Farm Management in the Face of Land Degradation: Dryland Salinity in Western Australia," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 53(4), pages 443-459, December.
    2. Kragt, Marit E. & Pannell, David J. & Robertson, Michael J. & Thamo, Tas, 2012. "Assessing costs of soil carbon sequestration by crop-livestock farmers in Western Australia," Agricultural Systems, Elsevier, vol. 112(C), pages 27-37.
    3. Moore, A. D. & Donnelly, J. R. & Freer, M., 1997. "GRAZPLAN: Decision support systems for Australian grazing enterprises. III. Pasture growth and soil moisture submodels, and the GrassGro DSS," Agricultural Systems, Elsevier, vol. 55(4), pages 535-582, December.
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    6. repec:ags:afbmau:284943 is not listed on IDEAS
    7. Tas Thamo & Ross S. Kingwell & David J. Pannell, 2013. "Measurement of greenhouse gas emissions from agriculture: economic implications for policy and agricultural producers," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(2), pages 234-252, April.
    8. Ross Kingwell, 2011. "Managing complexity in modern farming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(1), pages 12-34, January.
    9. Islam, Nazrul & Xayavong, Vilaphonh & Anderton, Lucy & Feldman, David, 2014. "Farm productivity in an Australian region affected by a changing climate," 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia 165842, Australian Agricultural and Resource Economics Society.
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    11. Monjardino, Marta & Revell, Dean & Pannell, David J., 2010. "The potential contribution of forage shrubs to economic returns and environmental management in Australian dryland agricultural systems," Agricultural Systems, Elsevier, vol. 103(4), pages 187-197, May.
    12. Morrison, David A. & Kingwell, Ross S. & Pannell, David J. & Ewing, Michael A., 1986. "A mathematical programming model of a crop-livestock farm system," Agricultural Systems, Elsevier, vol. 20(4), pages 243-268.
    13. Anwar, Muhuddin Rajin & Liu, De Li & Farquharson, Robert & Macadam, Ian & Abadi, Amir & Finlayson, John & Wang, Bin & Ramilan, Thiagarajah, 2015. "Climate change impacts on phenology and yields of five broadacre crops at four climatologically distinct locations in Australia," Agricultural Systems, Elsevier, vol. 132(C), pages 133-144.
    14. Ludwig, Fulco & Asseng, Senthold, 2006. "Climate change impacts on wheat production in a Mediterranean environment in Western Australia," Agricultural Systems, Elsevier, vol. 90(1-3), pages 159-179, October.
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    16. Senthold Asseng & David Pannell, 2013. "Adapting dryland agriculture to climate change: Farming implications and research and development needs in Western Australia," Climatic Change, Springer, vol. 118(2), pages 167-181, May.
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      by David Pannell in Pannell Discussions on 2019-09-23 15:50:02

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