Climate Change Impacts on Australian Agriculture by ABARE

Climate Change Impacts on Australian Agriculture

by ABARE, Don Gunasekera, Yeon Kim, Catherine Tulloh and Melanie Ford

There is broad agreement among the international scientific community that the global
climate has been changing and will continue to change (IPCC 2007a). According to the
current scientific literature, human induced increases in the atmospheric concentration of
greenhouse gases will continue to drive changes in climate across the globe, including
Australia, for the foreseeable future (IPCC 2007a; PMSEIC 2007).

The projected changes in climate are likely to be associated with a range of biophysical, environmental, social
and economic impacts across a range of sectors and throughout the world (Stern 2006;
Garnaut 2007). Agriculture is an important sector domestically and globally that is likely
to be affected directly and indirectly by climate change.

Although agriculture contributes only about 2 per cent of gross domestic product (GDP)
in Australia (ABARE 2007), around two-thirds of agricultural products are exported (DAFF
2007) and exports of agricultural products account for about 18 cent of total Australian
merchandise exports (ABARE 2007). In 2005, Australia was the world’s largest exporter
of wool and the second largest exporter of beef and veal, mutton and lamb, wheat and
sugar (ABARE 2007). Manufacturing of food, beverages and tobacco contributes a
further 2 per cent to Australia’s GDP (ABARE 2007).

In this article, the potential medium to long term economic and agricultural trade
impacts of potential changes in climate on Australian and global agriculture sectors are
investigated.

Main points

» Agriculture plays an important role in the global and Australian economies.
However, potential changes in climate may reduce productivity and output in
agricultural industries in major producing countries, including Australia, in the
medium to long term.
» ABARE analysis indicates that future climate changes and associated declines in
agricultural productivity and global economic activity may affect global production
of key commodities: for example, global wheat, beef, dairy and sugar production
could decline by 2–6 per cent by 2030 and by 5–11 per cent by 2050, relative
to what would otherwise have been the case (the ‘reference case’).
» Furthermore, Australian production of these commodities could decline by an
estimated 9–10 per cent by 2030 and 13–19 per cent by 2050, relative to the
reference case.
» These changes would also have signifi cant implications for international agricultural
trade. For example, Australian agricultural exports of key commodities
are projected to decline by 11–63 per cent by 2030 and by 15–79 per cent by
2050, relative to the reference case.
» Australia is projected to be one of the most adversely affected regions from
future changes in climate in terms of reductions in agricultural production and
exports.
» There is a continuing need for the agriculture sector to maintain strong productivity
growth in order to cope with the potential pressures emerging from climate
change. In this context, adaptation measures, including improved agricultural
technologies, will be particularly important in reducing the potential impacts.
» There is also an urgent need for policies that encourage rather than impede
adjustment in vulnerable sectors in agriculture, including already marginal
farming enterprises.
» In order to respond to climate change in an effi cient manner and maintain and
enhance the productivity and international competitiveness of Australian industries,
further research and development is required in both climate change adaptation
and mitigation technologies and measures.