The economics of technological innovation for adaptation to climate change by broadacre farmers in Western Australia

Transcription

1 The economics of technological innovation for adaptation to climate change by broadacre farmers in Western Australia Donkor Addai School of Agricultural and Resource Economics Supervisors: W/Prof. David Pannell Prof. Ross Kingwell Adj./Prof. Michael Ewing Assist/Prof. John Finlayson

2 Acknowledgements Funding The University of Western Australia Future Farm Industries CRC Ltd Technical Assistance Dr Senthold Asseng, Dr Dean Thomas and Mr Nariv Khimashia (CSIRO)

3 Climate change Research Problems Unavoidable to some extent due to increase in CO 2 Higher temperatures Low rainfall in WA Impact on agriculture Negative impacts ( yield, cost, pest and diseases) Positive impacts ( photosynthesis, waterlogging/salinity)

4 Research Problems Agricultural carbon emissions (16%) Fixed carbon price ($23/t CO 2 -e from July 2012) Moving to ETS in ; compensation for EITE Agricultural sector excluded, but may be included in future Direct and indirect impact on agricultural sector Carbon Farming Initiative

5 Research Problems Adaptation Need for flexible and resilient agriculture systems Expectations of adaptation Adaptation options Adjust practices, technologies (tillage, stubble retention) Change systems (enterprise mix-rotations, annuals vs. perennials)

6 Focus of PhD research Impact of climate change on agriculture with and without adaptation Impact of mitigation policy on agriculture with and without adaptation

7 Climate and carbon dioxide projections 2030 CO 2 Rainfall (%) (ppm) Temp ( C) CO 2 Rainfall (%) (ppm) Temp ( C)

8 Study Region ~156km from Perth Semi-arid Rainfall: mm/year Winter rainfall Winter cropping Farm size: ~2000ha

9 Modelling Approach Existing model: MIDAS Whole-farm bio-economic linear programming Optimisation (maximises profit) Steady-state

10 Modelling Approach Revise and debug existing model Use APSIM and GrassGro Use National GHG Accounting Use local sequestration measurements

11 Assumptions Changes in climate and CO 2 Prices, cost, technology, farm size and labour are unchanged (2012 levels) Changes are difficult to predict (esp. technology) **Changes in price and technology considered in the thesis

12 Impact of climate and CO 2 with adaptation on base-case optimal farm plan Units Base-case 450ppm/-5%/+1.25 C Net Return $'000/yr Farm area in crop % Cereal area ha (-7%) Grain legume area ha (3%) Oil seeds area ha (46%) Pasture area ha (-12%) Sheep flock dse (-13%)

13 2030-% change in profit relative to base case as a result of changes in climate and CO 2 With CO 2 (ppm) Adaptation Temp ( C) Rainfall (%) Without Adaptation Rainfall (%) CO 2 (ppm) Temp ( C)

14 2030-% change in profit relative to base case as a result of changes in climate and CO 2 With Adaptation Rainfall (%) CO 2 (ppm) Temp ( C) Without Adaptation Rainfall (%) CO 2 (ppm) Temp ( C)

15 2050: % change in profit relative to base case as a result of changes in climate and CO 2 With Adaptation CO 2 (ppm) Temp ( C) Rainfall (%)

16 2050: % change in profit relative to base case as a result of changes in climate and CO 2 With Adaptation Rainfall (%) CO 2 (ppm) Temp ( C) Without Adaptation CO 2 (ppm) Temp ( C) Rainfall (%)

17 Effect of carbon pricing with adaptation on optimal net return 390/0%/0.00 C 450/-5%/1.25 C 525/-20%/2.50 C 525/-20%/2.50 C Base case Low ($ 000/yr) Moderate ($ 000/yr) High ($ 000/yr) Agric. is excluded 23 $/t $/t $/t Agric. is included 23 $/t $/t $/t

18 Main messages Adaptation: reduces negative impact or increases positive impact of climate/co 2 changes on farm profit 2030: changes in climate/co 2 slightly positive relative to : highly negative if CO 2 is at the high end of expectations; neutral-positive if CO 2 is at the low end Agriculture included in carbon pricing scheme: negative impact on farm profit unless carbon price is very high

19 Main messages Adaptation: reduces negative impact or increases positive impact of climate/co 2 changes on farm profit 2030: changes in climate/co 2 slightly positive relative to : highly negative if CO 2 is at the high end of expectations; neutral-positive if CO 2 is at the low end Agriculture included in carbon pricing scheme: negative impact on farm profit unless carbon price is very high