Modelling the effects of climate change on the profitability of Australian farms

Recent shifts in the Australian climate including both higher temperatures and lower winter rainfall have had significant effects on the agriculture sector. Despite these recent trends, there remains uncertainty over the future climate and its potential impacts on Australian farm businesses. In this...

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Bibliographic Details
Published in:Climatic change 2022-05, Vol.172 (1-2), Article 12
Main Authors: Hughes, Neal, Lu, Michael, Soh, Wei Ying, Lawson, Kenton
Format: Article
Language:English
Subjects:
Adaptation
Agriculture
Atmospheric Sciences
Climate change
Climate Change/Climate Change Impacts
Climate effects
Climate models
Earth and Environmental Science
Earth Sciences
Economics
Farms
Future climates
High temperature
Livestock
Livestock farming
Mathematical models
Profit
Profitability
Profits
Rain
Rainfall
Rainfall simulators
Statistical models
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Summary:Recent shifts in the Australian climate including both higher temperatures and lower winter rainfall have had significant effects on the agriculture sector. Despite these recent trends, there remains uncertainty over the future climate and its potential impacts on Australian farm businesses. In this study, a statistical model of Australian cropping and livestock farms is combined with downscaled temperature and rainfall projections for 2050, to simulate the effects of climate change on farm profits. These future projections are compared against both a historical reference climate (1950 to 2000) and recent conditions (2001 to 2020). The results provide an indication of ‘adaptation pressure’: showing which regions, sectors and farm types may be under greater pressure to adapt or adjust to climate change. Future scenarios produce a wide range of outcomes, with simulated change in average farm profits (without any long-run adaptation or technological advance) ranging from −2 to -32% under RCP4.5 and −11 to −50% under RCP8.5, compared with a decline of 22.3% under observed post-2000 conditions (all relative to 1950 to 2000 climate). In contrast with the recent observed changes, projections show relatively moderate effects in south-eastern Australia, but relatively stronger effects for livestock farms in northern Australia.
ISSN:0165-0009
1573-1480
DOI:10.1007/s10584-022-03356-5