Economic risk implication of land use change in mixed crop-livestock systems as transformative adaptation to climate change

Australia’s extensive farming systems examined for implication of changes in landuse allocation to cropping and livestock as transformative adaptation options to climate change in 2030 across Australian wheat belt. Effectiveness evaluated at multiple scales (farm and region) and against multiple criteria (profit, risk, environmental impacts, GHG emissions and community impacts). On the whole, the strategy of shifting to an increased livestock and pasture farming system was a profitable adaptation in drier regions. It proved to be financially advantageous at a number of WA sites, across the whole NSW dry region but not in SA (except at Snowtown where could partly be beneficial). On average this option provides a net benefit of between $9 and $42 per hectare mean cash margin advantage for NSW and WA. Across the SA transect this option proved to be ineffective and resulted in a mean farm cash margin of $11 per hectare lower than the baseline. In broad terms the shift towards a more livestock dominated farming system was better able to provide profitability in years with below average growing conditions (i.e. more frequent in each of the future climate scenarios). The Generalised Pareto (GP) distribution was used to predict the return periods of extreme low incomes. The idea of using the GP distribution to model the tail distribution of a variable was first proposed by Pickands III (1971) and has been developed further by numerous authors. In our case the exponential distribution, a special case of the GP distribution was found to fit the data well.