For more than 20 years, we have invested in research and development that aims to improve climate forecasts for the season ahead, particularly for the period of 2–8 weeks and 3–6 months out.
In 2014, we engaged The Centre for International Economics to estimate the value of improved seasonal forecasts for Australia’s industry sectors.
The information here is based on their analysis for the agriculture sector.
- The importance of climate to agriculture
- The value of climate forecasts for agriculture
- More information
The importance of climate to agriculture
Agriculture is highly sensitive to climatic conditions, especially in Australia where we have the most variable climate on Earth.
Farmers are constantly making decisions in which the weather and climate are a factor, such as:
- if and when to plant crops
- what area and crop variety to plant
- if and when to irrigate
- if and when to apply fertiliser, and how much to apply
- when to harvest
- whether to buy or sell livestock.
No studies have estimated the impact of climate on agricultural production in Australia.
In the US in 2011 agricultural production was estimated to be down 12% due to climatic factors, and recent droughts are estimated to have reduced agricultural production by up to 30%, and 60% in the case of wheat.
Given the greater variability of Australia’s climate, the degree to which agricultural production is impacted by climate—its ‘climate sensitivity’—is likely to be higher here.
The value of climate forecasts for agriculture
While many factors influence their decisions, such as world commodity prices or currency fluctuations, farmers can use weather and climate forecasts to refine their decisions.
The Centre for International Economics estimates that the potential value of improved seasonal climate forecasts for Australia’s agricultural sector is significant, and much greater than for other sectors in the economy.
With even more climate variability expected under climate change, they expect that value to increase.
Forecasts are likely to be of greatest value in areas of high climate variability.
The value of improved seasonal forecasts for the agriculture sector depends on a wide range of complex and interrelated factors:
- forecast accuracy – including accuracy at relevant spatial resolution and lead times
- forecast adoption rates
- farmers’ attitudes to risk
- the seasonal conditions experienced.
Some climate-related loss in production is inevitable. No matter how skilful a climate forecast is, farmers can not eliminate all impacts of weather on production, and any actions they take to mitigate the risk will cost money, as will any decisions they make based on incorrect forecasts.
Benefits to rural communities
The value that improved seasonal climate forecasts bring to the agriculture sector is likely to have flow-on benefits and multiplier effects for rural communities.
An increase in farmer incomes and a decrease in income variability are generally beneficial for local communities.
The distribution of benefits through the community could be affected if:
- as a result of improved forecasts farmers spend less on locally sourced inputs, including hired labour, with possible negative impacts on the non-farming community
- increased profits flow to corporate farm headquarters rather than local communities.
The challenge of quantifying the benefits
While it is clear that the benefits of improved seasonal climate forecasts are significant for the agriculture sector, further work is needed to be able to fully quantify these benefits.
Future work should endeavour to quantify the value of seasonal forecasts to livestock operations and to a wider range of management practices.
- Improved seasonal climate forecasts: the benefits for Australian industry (excluding agriculture) [PDF 160 kb]
- Analysis of the benefits of improved seasonal climate forecasting: For sectors outside agriculture [PDF 823 kb]