Monthly Archives: August 2010

168 – Telling farmers how to adapt to climate change

Given the prominence of climate change and the political and technical difficulty of stopping it, governments feel that they need policy programs for climate change adaptation in agriculture. In Australia, these programs include a strong emphasis on giving farmers information. This is likely to be a waste of time.

Both academic writings and government documents emphasise various forms of information provision to farmers as being a key response required for agriculture to adapt successfully to climate change. For example, in its submission to a parliamentary inquiry on the subject, the Department of Agriculture, Fisheries and Forestry said:

“The Australian Government’s response to climate change adaptation in agriculture is therefore to focus on providing fundamental information and knowledge, and the decision support tools that will allow farmers and rural industries to manage the risks of climate change.”

Looking at a range of academic papers, suggested policy responses include:

  1. Collect information about climate change (e.g. data bases of weather information, analysis of trends in weather, regional predictions of climate change).
  2. Communicate the information to stakeholders in agriculture.
  3. Evaluate and extend the benefits and costs of farm-level adaptation strategies.
  4. Extension to encourage adoption of new technologies (e.g. water-saving technologies for irrigators).
  5. Enhance landholders skills and capacities (e.g. to deal with uncertainty, to manage reduced water availabilities).
  6. Help agribusinesses identify where changes may be needed to their longer-term strategies.
  7. Provide technical support during transitions to new systems that are more adapted to the emerging climate.

There are other responses mentioned as well, of course, but I’m going to focus on these strategies that depend on providing information to farmers.

The economics of information is a well-established field which provides the theory necessary to estimate the value of information. Put simply, the value of information provided to a farmer depends on the answers to three questions.

  1. What would the farmer do without the additional information?
  2. What would the farmer do differently with the additional information?
  3. What difference does this make to payoffs?

In essence, my argument is that (1) farmers will adapt appropriately to whatever climate change does occur even in the absence of a government program providing advice about it; (2) such advice would often prompt little if any further change in behaviour; so (3) the benefits to farmers of providing this sort of information will be minimal.

1.    What would the farmer do without the additional information?

Farmers adapt rapidly and well to a whole range of changes, including year-to-year weather fluctuations. A big part of any adaptation to climate change will occur almost without farmers realising it. As they have always done, they will respond to the weather conditions they face. If drought becomes more common, they will have to respond to drought more commonly, but they will still do it in similar ways as they were doing it before climate change became an issue. Even decisions with longer term consequences (e.g. about infrastructure or land purchase) would eventually be influenced by climate change once it was clear that it had occurred. Farmers’ readiness to respond may be influenced to some degree by general awareness of climate change, obtained from the media, which would occur irrespective of any farm-specific extension program.

2.    What would the farmer do differently with the additional information?

By “additional” information, I mean agriculture-specific locally targeted advice, above and beyond the sort of general information provided in the media. There are at least four reasons why farmers won’t do much differently in response to additional information about climate change and adaptation.

(a) because there is so much uncertainty in climate predictions. We are uncertain about all of the elements that we would need to know to be able to predict climate change accurately, including: the future level of economic activity, future energy technologies, future policies to abate emissions of greenhouse gases (each of which influences future emissions of greenhouse gases), the relationship between greenhouse gases and global climate, and the effects of global climate change on local climate (which is what mainly concerns farmers). With existing climate models, rainfall is even more uncertain than temperatures. If governments are giving advice about farming strategies, a further set of uncertainties becomes relevant, including future market prices, farming technologies, and the requirements of local climate policy. The value of information is related to the level of confidence one has in the information, but realistically, farmers cannot have much confidence in any particular prediction or recommendation for their location. They might respond to the information and find that it’s made no difference, or even made their situation worse.

(b) because climate change is predicted to occur slowly over the coming century. If this is correct, then there will be time for farmers to adapt as it occurs. There would be nothing to be gained by jumping in and adapting before the climate change had actually occurred. Indeed, given the high uncertainties outlined above, and that adapting pre-emptively would involve costs that cannot be recovered, there are clear benefits to farmers in waiting to see how climate does change before responding. Having so waited, any predictions that were made earlier have no value, no matter how accurate they were.

It is possible that there may be a step change in climate (as there appears to have been in Western Australia in the mid 1970s). Even then, however, pre-emptive adaptation makes no sense, because there is no way to predict when such a step change will occur. A farmer might make a change to management but then have to wait 80 years for the step change to occur, needlessly incurring costs over those 80 years.

(c) because farmers rightly doubt governments’ abilities to provide wise advice on their farm management strategies. One thing I’ve learnt in 25 years of building and running complex farm-level models is that it’s very hard to give advice to farmers that is better than their own decisions. The level of information one needs about the specific farm is much too high for most outsiders to give worthwhile advice about what the farmer should do. You need to be as well-connected and well-informed as a farm business consultant. Without that, the best you can hope for is to provide ideas for farmers to consider. Particularly dangerous is advice from scientists that does not factor in economic considerations.

(d) because there are limited relevant options that aren’t already adopted. In broadacre farming, for example, the sorts of practices that have been identified as appropriate for adapting to climate change include zero tillage, stubble retention, early sowing and enhanced weed control (Howden et al. 2007; Stokes and Howden 2010). However, these are already things that are accepted elements of good farming practice. Zero tillage is adopted by 80 to 90 per cent of broadacre farmers in Australia, and all cropping farmers are obsessed with weed control, so there is almost no scope for farmers to adapt by further adopting these practices.

There may be exceptions in the case of decisions that have long-term consequences, particularly if those decisions cannot easily be deferred until later. Decisions about where to purchase new land could be one example, although even here the issue of uncertainty of predictions looms large.

3.    What difference does this make to payoffs?

For the great majority of decisions that farm managers have to make (year-to-year management decisions of all types), the above factors mean that the value of providing information to farmers about climate change and adaptation strategies is likely to be very low. Even though farmers may well respond to climate change by altering their management, they are unlikely to alter their management in response to information about climate change or how best to adapt to it.

Even if they do respond, depending on the nature of the change, the impact on their profits may be little. I’ve previously outlined the issue of flat payoff functions, which are common in agriculture, and mean that management changes within a broad range around the optimum make little difference to profits (Pannell, 2006).

Rather than providing information to farmers about their adaptation to climate change, the limited resources available for agricultural research and extension would be much better spent on development of new agricultural technologies that are more productive. Some of that effort should be devoted to developing technologies that may be better adapted to predicted climate.

David Pannell, The University of Western Australia

Further reading

Howden, S.M., Soussana, J.F., Tubiello, F.N., Chhetri, N., Dunlop, M., and Meinke, H.M. (2007). Adapting agriculture to climate change. Proceedings of the National Academy of Sciences 104, 19691-19696.

Pannell, D.J. (2006). Flat-earth economics: The far-reaching consequences of flat payoff functions in economic decision making, Review of Agricultural Economics 28(4), 553-566. Final published paper at journal web site here. Prepublication version here (44K). Powerpoint file (315K), or see Pannell Discussion 88.

Pannell, D.J. (2010). Policy for climate change adaptation in agriculture, Paper presented at the 54th Annual Conference of the Australian Agricultural and Resource Economics Society, Adelaide, 10-12 February 2010. Here

Stokes, C.J. and Howden, S.M. (2008). An overview of climate change adaptation in Australian primary industries – impacts, options and priorities, CSIRO, Canberra.