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Potential Economic Benefits of Adapting Agricultural Production Systems to Future Climate Change

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Abstract

Potential economic impacts of future climate change on crop enterprise net returns and annual net farm income (NFI) are evaluated for small and large representative farms in Flathead Valley in Northwest Montana. Crop enterprise net returns and NFI in an historical climate period (1960–2005) and future climate period (2006–2050) are compared when agricultural production systems (APSs) are adapted to future climate change. Climate conditions in the future climate period are based on the A1B, B1, and A2 CO2 emission scenarios from the Intergovernmental Panel on Climate Change Fourth Assessment Report. Steps in the evaluation include: (1) specifying crop enterprises and APSs (i.e., combinations of crop enterprises) in consultation with locals producers; (2) simulating crop yields for two soils, crop prices, crop enterprises costs, and NFIs for APSs; (3) determining the dominant APS in the historical and future climate periods in terms of NFI; and (4) determining whether NFI for the dominant APS in the historical climate period is superior to NFI for the dominant APS in the future climate period. Crop yields are simulated using the Environmental/Policy Integrated Climate (EPIC) model and dominance comparisons for NFI are based on the stochastic efficiency with respect to a function (SERF) criterion. Probability distributions that best fit the EPIC-simulated crop yields are used to simulate 100 values for crop yields for the two soils in the historical and future climate periods. Best-fitting probability distributions for historical inflation-adjusted crop prices and specified triangular probability distributions for crop enterprise costs are used to simulate 100 values for crop prices and crop enterprise costs. Averaged over all crop enterprises, farm sizes, and soil types, simulated net return per ha averaged over all crop enterprises decreased 24% and simulated mean NFI for APSs decreased 57% between the historical and future climate periods. Although adapting APSs to future climate change is advantageous (i.e., NFI with adaptation is superior to NFI without adaptation based on SERF), in six of the nine cases in which adaptation is advantageous, NFI with adaptation in the future climate period is inferior to NFI in the historical climate period. Therefore, adaptation of APSs to future climate change in Flathead Valley is insufficient to offset the adverse impacts on NFI of such change.

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Acknowledgments

The research reported here was supported in part by the National Research Initiative of the USDA Cooperative State Research, Education and Extension Service, grant number 2006-55101-17129. We acknowledge the Program for Climate Model Diagnosis and Intercomparison (PCMDI) and the WCRP’s Working Group on Coupled Modelling (WGCM) for their roles in making available the WCRP CMIP3 dataset. Support of this dataset is provided by the Office of Science, U.S. Department of Energy. Any use of trade, product, or firm names is for descriptive purposes only and does not imply endorsement by the U.S. Government.

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Authors and Affiliations

  1. Center for Applied Research and Environmental Systems, University of Missouri, Columbia, MO, USA

    Tony Prato

  2. New Jersey Institute of Technology, Chemistry and Environmental Science, Newark, NJ, USA

    Qiu Zeyuan

  3. USGS Northern Rocky Mountain Science Center, Bozeman, MT, USA

    Gregory Pederson

  4. School of Natural Resources, University of Arizona, Tucson, AZ, USA

    Gregory Pederson

  5. USGS Northern Rocky Mountain Science Center, West Glacier, MT, USA

    Dan Fagre & Lindsey E. Bengtson

  6. Blackland Research and Extension Center, Temple, TX, USA

    Jimmy R. Williams

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  1. Tony Prato
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Correspondence to Tony Prato.

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Prato, T., Zeyuan, Q., Pederson, G. et al. Potential Economic Benefits of Adapting Agricultural Production Systems to Future Climate Change. Environmental Management 45, 577–589 (2010). https://doi.org/10.1007/s00267-010-9427-0

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