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Studying the role climate change plays in farmers' income fluctuations has found no big impact, so technological farming, land consolidation and improved market information can all help farmers to mitigate financial risks from global warming.

Climate data consisted primarily of temperature and precipitation. They used this model to identify links between climate factors and income, and then look at what would happen to incomes given certain changes.

Using 30 years of historical data, the research found climatic change accounted for only about 2%-3% of fluctuations in agricultural incomes.

China’s agricultural output has increased in recent years, and if climate change has had any impact it has just been to slow that increase a bit. The main impact of climate change won’t be increased temperatures, but greater fluctuations, but technological advances bolster output, cancelling out much of the effects of climate change.

As for the impact of climate change on the agricultural economy, there are two issues to look at: agricultural output, and the market.

First, crop and climate models use hypothetical conditions, while economic models use actual data and are more realistic. Second, an obvious failing of the climate models is that the scientists haven’t considered how farmers will respond, and their responses cancel out some of the impacts.

Agricultural incomes are also affected by market reactions. In a dry year, harvests may be smaller, but the market quickly responds by offering higher prices, so farmers earn more for the same quantity of harvest, and those higher prices also mean more is invested in production. So overall, losses may not be as big as predicted. Short term losses can, as farmers respond to the market, be made up by longer term gains. Also, globalized markets will also acts as a buffer zone, evening out price fluctuations in specific locations.

Moreover, agricultural incomes in south China are more sensitive to changes in precipitation, while in the north they are sensitive to both temperature and precipitation. More irrigation will help the north of China deal with the drier conditions caused by climate warming.

The northward movement of crops initially suggests an expansion of the extent of some crops planted in the south, but climate is only one factor: market prices are keys to what gets planted. If a certain crop isn’t suitable for planting at high latitudes, but later becomes suitable through improved strains, then the technology is in place to make the shift if prices increase. So a big issue currently is how to guide technology to reduce the impact of climate change on agriculture.

Overall, farmers need to guard against market risk first. Climate change comes second.

The gLAWcal Team

POREEN project

(Source: China Dialogue)

Thursday, 12th February 2015