Synopsis 1 – Business and economics

Chair: Karl Mallon


 

Preparing Australian Dairy Businesses for Extreme and More Variable Climates through Interdisciplinary Research. (923)

Monique White 1 , Gillian Hayman 1 , Rachel Brown 1 , Matthew Harrison 2 , Brendan Cullen 3 , Margaret Ayre 3 , Dan Armstrong 4 , Warren Mason 1 , Richard Rawnsley 2 , Ruth Nettle 3 , Ruth Belin 3 , Steve Waller 3 , Catherine Phelps 1

  1. Dairy Australia, Murray Bridge, SA, Australia
  2. Tasmanian Inst. Agriculture, Burnie, Tas, Australia
  3. University of Melbourne, Melbourne, VIC, Australia
  4. Jindivick, VIC, Australia

To inform future investment the Australian dairy industry must fully explore the impacts of climate extremes and a more variable climate.  Using three dairy businesses in differing regions, a range of farm development options will be explored – some options will push the boundaries of current farming practice, but all will retain economic and social reality.  Biophysical and economic modelling, social research and farmer engagement will assist to identify farm management responses that make economic sense and build human and biophysical capability to manage a more challenging future.

The project examines:

  • 1. Trade-offs between profitability, risk, social impacts, and greenhouse gas emissions associated with realistic farm development options.
  • 2. Potential impacts of climate variability and extreme events on economic, biophysical and social aspects of farm development options.
  • 3. Management options that provide effective adaptation and mitigation outcomes.
  • 4. Skills and industry support systems required to build capacity to respond, considering the reduced decision making capacity that accompanies increased uncertainty.

Preliminary research demonstrates that increased periods of drought as well as more intense rainfall events will reduce median pasture production by up to 31% in Southern Australia, while the combined effect of extended periods of drought, more intense rainfall events, longer heat waves and increased frequencies of hot days will reduce pasture production by up to 36%. Future work will examine how these impacts influence the temporal sequence of annual farm revenue and possible social consequences of risk perception and farm adaptation to extreme climatic events.


 

Climate risk of potential extreme rainfall impacts on mining projects in Peru (1096)

Francisco Gonzalez 1 , Ros Taplin , Simit Raval , Wendy Timms

  1. UNSW, Kensington, NSW, Australia
The mining industry represents an important economic activity for many countries including Peru. A changing climate and extreme weather events could represent potential production losses, local environmental and community impacts and a threat to the social license to operate for companies. Accordingly, current and future mining operations require practical methods to perform climate risk assessments.
This research demonstrates a new approach for mining risk assessment that includes use of climate change projection data as a first step, using Peru as a country case study. Available data from climate projections is used together with a mining industry database that provides location and expected life of mining projects in Peru, to identify regions potentially vulnerable to extreme rainfall events for the next three decades. Results from the assessment indicate that regions in the centre of Peru show high vulnerability to extreme rainfall events. In contrast, mining regions in southern Peru could face significant decreases in the intensity and frequency of extreme rainfall events and overall precipitation.
In addition, a number of documented adaptation strategies that have already been implemented to date for mining projects in Peru are presented. These serve the purpose of providing current and future projects with representative examples of adaptation strategies that may be learned from and potentially customised from other mine sites.
The research results indicate that particular attention should be given to the potential for increases in the frequency of extreme rainfall events impacting mining projects located in centre Peru’s Ancash and Cajamarca regions.


 

Estimating parameters for distributions for catastrophic and climate impacted events based on expert opinions (925)

Stefan Trueck 1 , Supriya Mathew 2 , Tim Keighley 1

  1. Macquarie University, North Ryde, NSW, Australia
  2. Charles Darwin University, Alice Springs, NT, Australia

The analysis of extreme events is challenging, but important, as occurrence of an extreme is usually associated with high damage. In general, frequency of extremes are modelled using Poisson distributions while damage is modelled using heavy-tailed distributions or distributions that allow for extreme outcomes such as e.g. the Lognormal, Weibull or Burr distribution. These distributions are widely used to fit damage data and help to better represent the tails of the distribution. There are certain specific contexts (e.g. local studies, extremely rare events) where data available may not be sufficient to fit a distribution or derive parameter values for the frequency and damage distributions. This paper discusses such circumstances and examines the potentials of using expert opinions in order to obtain values of the distribution parameters. In particular we illustrate how to solve for parameters so that common distributions satisfy two quantile conditions. An illustration of the method is provided for the application of quantifying the risk of bushfires in a local area in Northern Sydney.


 

Improving Risk Management and Carbon Sequestration with Sown Pastures (926)

Jeff Clewett 1 , Christian Capp 2 , Col Paton 3 , David Hall 4 , David George 5

  1. Agroclim, Highfields, QUEEN, Australia
  2. Condamine Alliance, Toowoomba, QLD, Australia
  3. Eco-Rich Grazing, Roma, QLD, Australia
  4. Agricultural Consultant, Toowoomba, QLD, Australia
  5. Griffith University, Brisbane, QLD, Australia

Climate change is a double edged sword for agriculture. Firstly, there is the challenge of maintaining sustainable production and profitability given the likelihood of more adverse climate conditions and consequent needs to adapt agricultural risk management such as converting marginal crop land to permanent pasture. Secondly, agriculture can help mitigate climate change by reducing and capturing GHG emissions but this may also reduce profitability. This paper outlines our on-farm work in southern Queensland’s Darling Downs region, and highlights bio-economic analyses to assess climate impacts and management options concerning the contribution of sown pastures to agricultural returns including changes in soil health through increased soil carbon. Current field trials on 7 properties address sub-tropical sown grass and grass-legume pastures established on both old cultivations and pastures needing renovation. Carbon levels in these soils (0-10 cm) are low and range from 0.4% on sandy loams to 2.0% on clay soils. A modified version of the GRASP model is being used to assess impacts of climate variability, climate change and management on the growth and condition of sown pastures, cattle live weight gains, economic returns, GHG emissions and soil carbon. Results show significant annual and decadal fluctuations in pasture productivity. They highlight the benefits of legumes and the importance of adjusting stock numbers to manage risk. Results are relevant to some 0.3 M ha in the region and suggest carbon sequestration rates up to 500 kg/ha/yr. Rates are dependent on environment and management regimes and can be negative due to drought or over-grazing.


 

Mainstreaming Climate Change Adaptation in a Multilateral Development Bank-funded road infrastructure Project in Cambodia: Challenges and Opportunities(927)

Bunlong LENG 1

  1. University of Melbourne, Robertson, QLD, Australia
Vulnerability to environmental and climate change, and the measures taken to reduce or adapt to it, are already well researched. However there is little research on how climate change adaptation is being mainstreamed into the large development investments of major donors in developing countries. Multilateral Development Bank (MDB) investments are often in climate-sensitive sectors and locations, particularly those exposed to extreme events like river basins and low-lying floodplains and deltas. A donor’s “as-usual” investments may actually increase climate change vulnerability or hamper the progress of poverty alleviation in the face of climate change. MDBs have recognized that efforts to overcome poverty and advance development can no longer ignore the urgent need to address climate change risks. With foresight, planning can be designed to reduce these risks. However, there is little evidence to show how MDBs have actually incorporated climate change adaptation (CCA) considerations into their development investments and how MDBs can become a guiding example for others (Boakye-Agyei, 2011, p. 265). Building on institutional theory associated with environmental impact assessment, this paper explores how climate change adaptation has been empirically mainstreamed into a Multilateral Development Bank-funded road infrastructure investment in Cambodia. The paper therefore provides a contribution to understanding whether the MDBs can play a leading role in promoting CCA considerations into their current and future development investments.

Exploring Adaptation Options For A Region Nominally Favoured by Climate Change – A Tasmanian Case Study (928)

Neil MacLeod 1 , David Parsons 2 , David Phelan 2 , Shaun Lisson 3 , Kerry Bridle 2

  1. CSIRO, Brisbane, Australia
  2. TIAR/UTAS, Hobart, Australia
  3. CSIRO, Hobart, Australia

Agriculture is important to the Tasmanian economy with an average farm gate value of production of ~$1,100 million or 5% of gross State product – the largest proportion for any Australian State. The total food revenue multiplier from the farm gate is 320% giving a sectoral contribution of 16% of gross State product. Therefore, prospective changes to agricultural production, including those from climate change, are of considerable local significance.

Tasmanian enterprises, dominated by mixed crop-livestock farms, are structurally diverse, and regionally influenced by edaphic, climatic and infrastructure constraints and opportunities. As managers have limited control over climate, agricultural production is particularly sensitive to climate variability and changes in the baseline climate. A regional assessment of the climate change impacts under a range of general circulation models and emission scenarios has identified the scope for positive yield gains in some crops and pastures due largely to a warming and wetting trend, and reduction in frost events. This affects the scope for changing the geographic domain of existing crop and pasture types, or possibly introducing new ones with consequent effects to regional enterprise structures and productivity patterns.

The paper describes the application of whole farm simulation modelling to two ‘synthetic’ mixed crop-livestock farms located in the Derwent Valley and Northern Midlands regions. A range of climate adaptation strategies is explored along with their impact on farm yields and financial bottom lines. Biodiversity implications of the associated intensification of land use, a shift from native vegetation to pasture or cropping, is also discussed.


 

A framework for estimating economic impacts of climate change on tea production: robust adaptation approaches (1097)

R P Dayani Gunathilaka , Jim Smart 1 , Gurudeo Anand Tularam 2

  1. Australian Rivers Institute, Griffith School of Environment, Griffith University, Brisbane, QLD, Australia
  2. Griffith School of Environment, Griffith University, Brisbane, QLD, Australia

Extreme weather occurrences over the past few decades have negatively affected output of major tea producing countries in the world. In this study, we describe a framework to estimate the economic impact of climate change on the yield and price volatility of tea in the presence of climate uncertainty to assist with identifying appropriate adaptation options. The study will be based on long term data on climate, tea yield and tea price from the tea sector in Sri Lanka, a country for which tea production is a significant sector of the economy. Multivariate time series analysis will be used to quantify the relationship between the different climate variables and the yield, productivity and price of tea.  Knowing yield and quality responses to climate drivers, forecasts of price movement in the presence of future climate change will be produced using Vector Autoregressive Models programmed in R.  Drawing on historical production and meteorological data from a cross-section of tea plantations, a translog-based model of tea production will be developed from which a supply curve for tea can be produced. Climate change-induced variations in yield, price and supply will then all be modelled to estimate the economic impact of climate change on the tea industry, using a partial equilibrium approach. Real options investment analysis and Bayesian models of producer behaviour will be used to identify robust climate change adaptation strategies in the presence of uncertainty. This proposed framework will be improved through the comprehensive comments of the scholars participated in the NACCF conference.