Lower crop yields test market forces

Liberalised food markets could ease the impacts of falling crop yields in southern regions such as Africa. Image: Fred Noy/UN Photo via Flickr

As global warming cuts crop yields, trade liberalisation in agricultural commodities will be needed to avoid food shortages and economic hardships.

LONDON, 13 September, 2016 – Food will cost the consumer more as a result of climate change, but it is not at all clear that farmers will profit accordingly, says a new study.

Ultimately, what happens will depend on national and international responses – but as temperatures rise and crop yields fall, producers will have to spend more to meet demand later this century.

Although the same basket of food would cost more, the losses to the consumer would be greater than the gain for the grower, according to the study of global agriculture and climate change by scientists at the Potsdam Institute for Climate Impact Research (PIK), Germany.

“Agriculture is very sensitive to climate change,” says the report’s lead author, Miodrag Stevanović, a PIK mathematician who has been looking at the economic problems of agriculture.

“Even a small increase of global mean temperatures can have significant effects on regional crop yields, affecting both the profitability of agricultural production and the share of income spent on food.

Agricultural resources

“Our study quantifies economic impacts and analyses the role of international trade as an adaptation measure. We find that economic losses in agriculture could add up to the annual amount of roughly 0.8% of global GDP at the end of the century with a very restricted trade regime.

“As small as this percentage sounds, it actually translates to losses of US$2.5 trillion and is comparably higher for regions with limited agricultural resources with respect to growing agricultural demand − for example, the Middle East, Africa and India.”

But if the world agreed to more liberalisation in agricultural commodities, this financial damage could in theory be reduced to 0.3% of global GDP.

At the bottom of this seemingly arcane set of calculations is a real problem. Climate change − with a greater hazard of dangerous floods in places where rainfall is high, and of prolonged drought in the naturally drier lands − has been predicted to result in harvest losses in Brazil, in Africa and in Europe.

“Irrespective of our assumptions on global trade, climate change will result in reduced
crop yields in many areas”

There have also been repeated warnings that, overall, climate change will impose economic hardship, and there is evidence that extremes of temperature in the growing season could in any case harm crop yields. And all this is likely to happen in a world in which human population will increase by another three billion.

The PIK scientists report in Science Advances journal that to measure the impact on agriculture, as temperatures rise, they tested simulations of crop growth in 19 different climate scenarios.

This involves a great number of unknowns. Will increasing levels of carbon dioxide in the atmosphere overall add to crop fertility? Growing seasons have been extended, but if summer heatwaves become more extreme, who will benefit? Climate change is already creating refugees and fuelling social conflict, so what kind of socioeconomic changes can be expected? But, the scientists say, trade could close the gap.

Alexander Popp, PIK’s expert on land use change, says: “Both global warming and free trade favour northern regions such as Europe and the US, since producers’ gains increase as trade patterns shift northwards.

“At the same time, southern regions such as Africa or India could theoretically reduce climate change-related damages by half through more liberalised food markets.

Reduced crop yields

“Irrespective of our assumptions on global trade, climate change will result in reduced crop yields in many areas. At the same time, intensifying production or expanding cultivated land into previously untouched areas may come at a risk: it could lead to additional greenhouse gas emissions through tropical deforestation or increased fertiliser use.”

So the risk of food shortages must be met with measures to reduce poverty. If prices go up, households will have to spend more for the same supplies, which means some could face hunger and malnutrition. Ultimately, the researchers think, it would be best to try to limit climate change.

“However, for impacts that cannot be avoided, an open and diversified trade system can be an important adaptation option,” says Hermann Lotze-Campen, another author of the report and chair of PIK’s climate impacts and vulnerabilities research domain.

“It can account for changes in global patterns of agricultural productivity, and thus allow for reducing production costs and enhancing food security,

“As climate change will have an amplifying effect on the gap between developed and developing countries, reductions in trade barriers will have to be accompanied by measures for poverty reduction and social safety nets.”. – Climate News Network

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