ARE Seminar by A/Prof Greg Hertzler

15 March 2013

Climate change and transformation of Australian wheat dominant agriculture. Abstract: The long term sustainability of Australian crop and livestock farms faces a substantial threat in the form of the uncertainty associated with climate change and climate variability. Uncertainties associated with the nature and magnitude of climate impacts presents a challenge for decision-making. Adaptation decisions can be made at the level of (1) adjustments to practices and technologies, (2) changes to production systems, or (3) transformation of industries, for example, by relocation to new geographical areas. Adjustments to existing practices are easy to make relative to changes to production systems or transformations at the industry level. Switching between production regimes requires new investments and infrastructure and can leave assets stranded. These changes can be partially or wholly irreversible but hysteresis effects can make switching difficult and mistakes costly to reverse. Real Options offers a framework to structure thinking and analysis of these difficult choices. Previous work has demonstrated how this decision framework applied to adaptation, referred to as 'Real Options for Adaptive Decisions' (ROADs), extends traditional economic analyses of agricultural investment decisions based on net present values to better represent incomplete knowledge and uncertainty. This project uses transects across space as proxies for future climate scenarios. We draw upon climate data, and data for representative farms, to calibrate real options models. In this report, we present the results of this analysis of the transformation of wheat dominant cropping systems in South Australia, New South Wales, and Western Australia. We find that farmers' decisions, as much as a changing climate, determine how agriculture will be transformed. All welcome to attend

Time: 3:00-4:30PM

Location: Room 241, Biomedical Building (C81), ATP

Contact: Ms Elizabeth Nolan

Phone: 02 8627 1108

Email: 0a2d4619280d09473179055b1a095b7821375c5c2d30475c0c05791331