Agriculture and forestry

Projected crop yield changes between the 2080s and the reference period 1961-1990 by two different models

Note: Model calculations using a high emission scenario (IPCC A2) and two different climate models: HadCM3/HIRHAM (left), ECHAM4/RCA3 (right).

Data source:

JRC PESETA project : http://peseta.jrc.ec.europa.eu/docs/Agriculture.html

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Agriculture

Agriculture accounts for only a small part of gross domestic production (GDP) in Europe, and it is considered that the overall vulnerability of the European economy to changes that affect agriculture is low (EEA, 2006). However, agriculture is much more important in terms of area occupied (farmland and forest land cover approximately 90 % of the EU's land surface), and rural population and income. The agriculture sector has a strong influence on other sectors, and, moreover, the effects of climate change may still be substantial at the European level because of the spatial distribution of changes. The overall economic indicators are related partly to total yield and market prices, as well as to many other factors (e.g. subsidies, labour and production costs, global price changes, efficiency and productivity, technological development, consumer demand, socio-economic development). Hence climate change is only one driver among many that will shape agriculture and rural areas in future decades. Socio-economic factors and technological developments will need to be considered alongside agro-climatic changes to determine future trends in the sector. In this respect, most projections of long-term impacts on yields do not fully consider technological progress and adaptation.
Agriculture is a more significant sector in southern European (Mediterranean) and southerly eastern European countries in terms of employment and GDP, and these countries will face greater stresses due to climate change that will lead to lower yields. A loss in agricultural potential would therefore impose a larger income loss in these regions than over the rest Europe. In contrast, the agricultural systems in western Europe are considered to have lower sensitivity to climate change, and modelling predictions show likely opportunities in terms of yield increases and wider agricultural crops for northern Europe. The recent IPCC 4th assessment report (2007b) concludes that in northern Europe, climate change is initially projected to bring mixed effects, including some benefits such as increased crop yields and increased forest growth. However, as climate change continues, its negative impacts are likely to outweigh its benefits.
Most of the analyses now build in (autonomous) adaptation, reflecting a likely trend of producers to alter practices and crop types by region as the climate changes. Several studies show the likely spatial patterns outlined above, with a strong distribution of yield changes across Europe, as found in the recent PESETA project, which has projections for regional yield changes for the 2080s. It shows that south and west Europe could experience a decrease in yields of 10 % or more (due among others to shortening of the growing season), though there are also improvements of yields in Nordic countries (increase in growing season, but also higher minimum temperatures in winter). The general decreases in yields in southern Europe will be combined with increases in water demand. Recent valuation studies in the United Kingdom predict increases in yields and also revenue in the 2020s, but with these declining by the 2050s and expected economic losses of up to GBP 24 million/year by the 2080s, particularly in more southern areas where water becomes increasingly limited.
However, while these models generally consider the effects of projected changes in temperature and CO₂ fertilisation, they do not fully consider issues of water availability, and rarely consider extreme events. The latter could be important for Europe in relation to heat extremes and floods. As an example, the droughts of 1999 caused losses of more than EUR 3 billion in Spain (EEA, 2004) and the hot summer of 2003 in Europe is estimated to have led to EUR 10 billion in economic losses to farming, livestock and forestry from the combined effects of drought, heat stress and fire (Munich Re, 2008). A proactive risk management and insurance scheme will therefore be vital to European agriculture in the near future. A major paradigm shift will also be required in order to incentivise autonomous and planned adaptation.
Finally, the role of autonomous and planned adaptation is extremely important for agriculture, and this has been studied intensively. While most analyses consider short-term autonomous adaptation, there are also potential long-term adaptations in the form of major structural changes and technological progress to overcome adversity caused by climate change, which are usually the result of a planned strategy. There are a number of studies that show the benefits of adaptation to farmers in reducing negative impacts, although the costs of adaptation are rarely made explicit.
A recent study commissioned by the EC (DG AGRI) on 'Adaptation to Climate Change in the Agricultural Sector' and undertaken by AEA-T and the Universidad de Politécnica de Madrid, analysed potential impacts, risks and opportunities as well as adaptation options for EU agriculture (EC, 2007). It indicates for example that the prolonged drought in Finland in 2002/2003 caused estimated losses of EUR 100 million compared with normal years. Water had to be transported by tanker to more than 1 100 farms (Martilla et al., 2005). In addition, it reports recent research activities such as that undertaken by the Latvian State Institute of Agrarian Economics on an agricultural insurance system. Potential economic effects on agriculture beyond cereals yields are also key issues. The expected increase in climate variability (extreme events) could trigger variability in agricultural production, food prices and farm income as the frequency of crop failures increases. Year-to-year weather variability is the main determinant of yield levels, which determine prices and the inherent risks of farming.

Forestry

Forestry is also a small part of European GDP, although in a large part of Europe it represents an important economic sector and also provides potential for carbon sequestration and environmental services. Forests in Europe are likely to be affected by climate change, in terms of distribution (forest area will expand in the north, but contract in the south), species composition, forest yield, windstorm damage and forest fires (Alcamo et al., 2007). Potential economic consequences of forest fires (i.e. enlargement of the fire-prone area and a lengthening of the fire season) include lost production and direct costs of fire fighting. In the summer 2003 heat wave in France, the costs of fighting forest fires for the Ministry of Interior increased from EUR 83 million in a normal year to EUR 179 million.
An on-going study commissioned by the EC (DG AGRI) on the 'Impacts of climate change on European forests and options for adaptation' led by the European Forest Institute (EFI), analyses in depth exposure, sensitivity, potential impacts, adaptive capacity and vulnerability in relation to European forests as well adaptation options (EC, 2008a). It indicates that forest damage by wind and snow is a continuing cause of economic loss in forestry throughout Europe. The economic cost of the damage corresponds approximately to hundreds of millions of US dollars each year. The economic impact of wind damage is particularly severe in managed forests because of the reduction in the yield of recoverable timber, the increased costs of unscheduled thinning and clear-cutting, and resulting problems in forestry planning. For example, in Sweden, approximately 4 million m³ of timber is damaged annually by snow and wind, roughly corresponding to EUR 100 million.
While the economic effects of timber production can be captured using market prices, forests (natural and managed) play a much greater role than timber alone, and there is a need to progress towards a total economic valuation of forestry including full ecosystem goods and services.