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Farming Profitably in A CHANGING CLIMATE • A Risk-Management Approach

A Risk-Management Approach

A CHANGING CLIMATE:

Farming Profitably in

Will Steffen, John Sims,

and James Walcott

in association with Natural

Resource Management Division,

Department of Agriculture,

Fisheries and Forestry, and the

Australian Greenhouse Office

F E B R U A R Y 2 0 0 6


© Commonwealth of Australia 2006

This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Commonwealth available from the Department of Communications, Information Technology and the Arts. Requests and inquiries concerning reproduction and rights should be addressed to the Commonwealth Copyright Administration, Intellectual Property Branch, Department of Communications, Information Technology and the Arts, GPO Box 2154, Canberra ACT 2601 or at http://www.dcita.gov.au/cca.

The Australian Government acting through the Bureau of Rural Sciences has exercised due care and skill in the preparation and compilation of the information and data set out in this publication. Notwithstanding, the Bureau of Rural Sciences, its employees and advisers disclaim all liability, including liability for negligence, for any loss, damage, injury, expense or cost incurred by any person as a result of accessing, using or relying upon any of the information or data set out in this publication to the maximum extent permitted by law.

Postal address: Bureau of Rural Sciences GPO Box 858 Canberra ACT 2601

Copies available from: BRS Publication Sales GPO Box 858 Canberra ACT 2601 Ph: 1800 020 157 Fax: 02 6272 2330

Email: [email protected] Internet: http://www.brs.gov.au

�Farming Profitably in A CHANGING CLIMATE • A Risk-Management Approach

The recent (2002–03) drought in eastern Australia highlighted the vulnerability of agricultural industries to climate variability. On top of this, there is a growing recognition that climate change poses a significant additional threat to Australia’s agricultural industries — cropping, grazing, horticulture and forestry.

These climatic risks will best be managed with coordinated adaptation strategies being a key feature in the long-term planning of Australia’s farming industries. To achieve this, an industry perspective is crucial to help shape and focus the research required.

The Bureau of Rural Sciences (BRS), together with the Natural Resource Management Division of the Australian Government Department of Agriculture, Fisheries and Forestry (DAFF), and the Australian Greenhouse Office (AGO) of the Australian Government Department of Environment and Heritage (DEH) ran a workshop called ‘Farming Profitably in a Changing Climate’, with additional support from the Managing Climate Variability Program of Land and Water

Australia. This workshop, held in Canberra on 7–8 December 2004, was part of a larger effort to enhance industry resilience to future climates. It opened a dialogue between the leaders of Australia’s agricultural industries, government and the scientific research community on the industries’ ‘knowledge needs’ for climate adaptation.

This workshop, follow-up meetings and report were undertaken while Dr Will Steffen was a Visiting Fellow at BRS and AGO during 2004–05.

I commend this report of the workshop and future directions to all those interested in helping Australian agriculture continue to be profitable, self-reliant and sustainable.

Dr Cliff Samson Executive Director Bureau of Rural Sciences

Foreword

� Farming Profitably in A CHANGING CLIMATE • A Risk-Management Approach

This report discusses a risk-management approach to climate change in rural Australia, and is based on a workshop held in Canberra in December 2004. The workshop explored the sensitivity of agricultural industries to climate, the ways in which climate enters the decision-making process, and the capability of industry to adapt to potential future climate risks. More than 50 representatives of the agricultural production, government and scientific research communities participated in the meeting.

Additional consultations, which have contributed to this report, have taken place at meetings in Perth, sponsored by the Pastoralists and Graziers Association of Western Australia, and in Brisbane, sponsored by the Queensland Farmers Federation and the Regional Groups Collective (Queensland).

Most of the industries that were consulted consider they can handle gradual change in underlying climatic averages, even if it involves shifts in the incidence of extreme events, through good management of within-season variability. However, a major, abrupt change in climate would cause problems. A critical question is whether climate change will unfold as gradual change in underlying averages, to which agricultural industries can adapt in many cases, or whether it will unfold as a series of abrupt or stepped changes that will severely stretch industries’ capacity to cope.

The type of climate information required to support decision making in the agricultural industries depends on whether tactical (within growing season) or strategic (multiyear or decadal) decisions are being considered. For most Australian agricultural industries, within-season variability remains the most important feature of climate that affects profitability. The ways in which underlying, long-term trends in climate affect within-season variability is the most important feature of climate change for rural industries.

The best outcomes will come from avoiding the threats and seizing the opportunities as they present. A risk-management approach is an effective way for Australia’s rural industries to respond to a changing climate — particularly when it is based on a holistic assessment of climate change, considering changes in temperature, rainfall, humidity, winds, storms, and other variables. A risk-management approach provides a sound framework for identifying, analysing, evaluating and dealing with the challenges and opportunities associated with climate change.

Executive summary

A workshop report…

with additional

consultation.

Adapting to a

changing climate…

requires information

for decision making.

A risk-management

approach provides

a framework for

response.


Producers have already learnt much about maintaining profitability in a variable climate and this will be directly useful in dealing with longer term change in climate. The key to managing profitably under a changing climate is flexibility and adaptability, with industry driving the process.

Managing for climate risks is a responsibility of producers and the rural industries themselves, but coherent government policy and targeted scientific research can support the various management approaches of industry. The workshop felt strongly that a coordinated approach is needed to deal effectively with climate change. This requires integration of effort and resources across the producer, industry, government and research sectors, and integration of adaptation and mitigation approaches, while maintaining the individuality of climate adaptation strategies for particular industries.

The use of a risk-management approach for climate adaptation in Australia represents a new phase in applying impacts and adaptation research to policy and management. Much previous work has been driven by climate scenarios that have emphasised the biophysical aspects of the climate system. This ‘second generation’ risk-based approach emphasises the system that is being impacted, particularly its vulnerability, resilience or adaptability to multiple interacting stresses, one of which is climate.

Past experience

will help maintain

profitability…

supported by

a coordinated

response across the

producer, industry,

government and

research sectors…

with policy

and research

strategies focused

on increasing

the resilience of

the system being

impacted.


Contents

Foreword 1

Executive summary 2

1 The adaptation challenge 5

2 A risk-management approach for climate adaptation 7

3 Agricultural industry perspectives on climate risks 10

3.1 Sensitivity to climate 10

3.2 Climate and decision making 12

3.3 Managing for a changing climate: avoiding risks and seizing opportunities 14

3.4 Maintaining and increasing profitability 16

3.5 Policy and scientific research issues 18

4 The next steps in responding to a changing climate 19

Activity 1: Analysing and interpreting climate science for producers and industry 20

Activity 2: Vulnerability analyses and maps 20

Activity 3: Improving resilience and adaptive capacity 21

Acknowledgements 24

Further reading 25


The adaptation challenge

Climate variability has always been a challenge to farming in Australia — a challenge now compounded by longer term changes in climate. There is strong evidence that Australia’s climate is changing and will likely continue to change throughout this century, probably at an accelerating rate. This challenges societies to adapt, and this challenge is greatest for those sectors in the economy, such as the rural industries, that are significantly influenced by climate.

As part of the Government-Business Climate Change Dialogue, in 2003, the Agriculture and Land Management Working Group produced the report Implications of Climate Change and Greenhouse Policy for Rural and Regional Australia. The report included an analysis of impacts and adaptation issues and concluded with an outline of the consequent research needs.

Subsequently, Climate Change Risk and Vulnerability, released by the Australian Government in July 2005, provided a high-level strategic risk and vulnerability assessment for Australia. It identified agricultural industries as highly vulnerable to climate change and requiring urgent attention.

The issue of climate change has also been highlighted by the agricultural industry as a major threat to its viability. The president of the National Farmers’ Federation noted the importance of climate risks for agricultural production in an address to the Press Club in August 2004, and flagged changing climate risks as one of the most serious challenges facing Australian agriculture this century.

The Australian Government is responding to this challenge and announced the National Climate Change Adaptation Programme in May 2004, and through a number of initiatives is developing a ‘second-generation’ approach to help producers and the industry more broadly to deal with changing climate risks in agriculture. This is an

important step towards a whole-of-government approach to setting appropriate policy to support producer and industry adaptation to a changing climate.

The first major step in implementing a risk-management approach to climate adaptation for agriculture was a workshop to listen to producers’ and industries’ views. The workshop, held in Canberra on 7–8 December 2004 was co-sponsored by the Natural Resource Management Division of DAFF, BRS, AGO, and the Managing Climate Variability Program of Land and Water Australia. The workshop was opened by The Hon Warren Truss MP, the then Minister for Agriculture, Fisheries and Forestry.

The goal of the workshop was to work with industry to identify the risks associated with a changing climate and to examine industry’s current adaptive capacity to minimise these risks, with a view to:

n maintaining and preferably increasing the profitability, competitiveness and sustainability of agricultural industries and rural Australia in a changing climate

n protecting and enhancing the natural resource base on which rural Australians depend for their livelihoods in the face of a changing climate.

FIGURE � Agriculture is one of the sectors of the Australian economy most directly affected by climate.

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The workshop explored the sensitivity of industry to climate, the ways in which climate enters the decision-making process, and the capability of industry to adapt to potential future climate risks. More than 50 representatives of the agricultural production, government and scientific research communities participated in the meeting. Further consultations with producers have taken place at meetings in Perth, sponsored by the Pastoralists and Graziers Association of Western Australia, and in Brisbane, sponsored by the Queensland Farmers Federation and the Regional Groups Collective (Queensland).

This document reports on the consultations with producers and industry held as part of the Canberra, Perth and Brisbane meetings. Industry consultations will be an ongoing process to refine and update industry perspectives on the nature of climate risks as more scientific information becomes available and as producers and industries gain more experience in dealing with the risks posed by a changing climate. This report therefore provides a working base for further consultations with individual industries and across various regions. This consultative process should guide the development of the science-based tools and information required by the agricultural industries to manage climate risks.

BOX �

The Australian Government’s approach to climate change issues in rural Australia is to achieve ’win-win’ outcomes in terms of both environment and production. The approach must be informed by industry consultation and engagement and built on a partnership approach. The overall strategy is to integrate greenhouse gas emissions management and analysis with climate change impacts and adaptation, with both components of the approach supported by climate change science.

The Government–industry partnership approach for agriculture has already achieved some notable successes. These include improvement of nitrogen management to reduce nitrous oxide emissions, modified livestock production systems to reduce methane emissions, improved energy efficiency on farms, enhanced efficiencies along the food supply chain, and increased adaptive capacity to climate change. In terms of climate change impacts and adaptation, the Australian Government is collaborating with other Commonwealth agencies, with state and territory governments, and with industry and the research community to enhance understanding of vulnerabilities in key agriculture-related sectors, including water quantity and quality; pests, weeds and diseases; ecosystems and degradation processes; socioeconomic impacts in regional Australia; and the built environment and infrastructure.

The Greenhouse Action in Regional Australia program is an initiative with a budget of $20.5 million over four years (2004–08). The program comprises policy and coordination elements (including working with States on national priority issues), investment in research and development (understanding impacts, adaptation and abatement options), agriculture industry partnerships, and regional support for forest sinks. The National Climate Change Adaptation Programme focuses on policy advice, especially in terms of risk and vulnerability assessments; building adaptation capacity, and developing research partnerships on a number of key issues for climate change adaptation.

Some relevant priorities on the agenda of the climate change strategy for the 2004–08 period are to deliver tools to assist enterprises, sectors and regions with planning for likely impacts and adaptation; to forge partnerships to deal with Australia’s major vulnerabilities to climate change through integrated assessments; to conduct targeted research and development to address knowledge gaps; to provide policy advice to the Australian Government; to improve regional climate change science and projections; and to encourage an ongoing dialogue with industry.

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Although there is strong evidence for climate change, there is still considerable uncertainty associated with projections of precisely how the climate will change in the future, particularly at regional and local scales where most of the impacts are being felt and at which many management decisions are made (see Box 2). These uncertainties will likely remain for some time despite improvements in the scientific understanding of climate change. Adapting to such an uncertain future demands a flexible approach based on assessing, analysing and responding to the risks posed by a changing climate.

The risk management framework developed jointly by Standards Australia and Standards New Zealand provides an effective approach to deal with a significant but highly uncertain risk. This approach has already been adopted by the insurance industry in response to a changing climate (see Box 3). The use of the risk management framework for adapting to climate change is described in more detail in the BRS Science for Decision Makers booklet Climate Change: Adaptation in Agriculture.

The generic risk management template, as adapted to Australia’s agricultural sector, is based on five stages:

n Stage �: Establishing the criteria for identifying and assessing risk

– Determining the nature of the management challenge

n Stage �: Identifying the risk

– Identifying industry perspectives on vulnerability and adaptability

n Stage �: Analysing the risk

– Understanding Australia’s changing climate

n Stage �: Evaluating the risks posed by climate change

– Exploring management options for minimising risk

n Stage �: Treating the risk of climate change

– Implementing strategies for maintaining viable agricultural industries.

This report represents the first phase in the implementation of the risk-management approach to climate adaptation in rural Australia by focusing on the first two stages of the five-stage risk management approach described above. Section 3 presents industry and producer perspectives on climate risks and their capability to deal effectively with such risks. The information in this section is drawn directly from the working group sessions and plenary discussions at the Canberra workshops and on discussions at the subsequent meetings in Perth and Brisbane. Section 4 briefly outlines the proposed next steps in implementing the risk management approach for climate adaptation in agriculture. These steps comprise an initial implementation of Stage 3 of the risk-management framework, and are based directly on the advice obtained from producers and industry at the December 2004 workshop described in more detail in the next section.

A risk-management approach for climate adaptation

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BOX �

Climate science has made enormous progress over the past two decades in understanding the nature of Earth’s climate and the changes that are taking place. Research on climatic changes in the past has provided a long-term context against which contemporary change can be evaluated. The weight of this evidence now indicates that there is a discernible human influence on climate at a global scale.

Natural climate variability will continue to be important. In fact, the underlying trends of human-driven climate change are interacting with natural patterns of variability, giving rise to some interesting effects. Extreme weather events are increasing much more in both magnitude and frequency than the slow and ‘modest’ changes in underlying trends would suggest. For example, although mean global temperature, and Australia’s mean temperature, have increased by 0.6–0.7oC over the past 50 years, hot weather extremes have become more severe and more frequent while cold events become less severe and less frequent.

For example, in February 2004, Australia experienced a record heatwave, about six months after the European heatwave of August 2003. In Australia, mean maximum temperatures for the 1–22 February 2004 period were 5–6oC above average throughout large areas of eastern Australia and reached 7oC above average in parts of New South Wales. About two-thirds of continental Australia recorded maximum temperatures over 39oC in the period. Unusually warm weather also occurred in early 2005, with April being the warmest April recorded for the past century over much of the country (see Figure 2).

The issue of whether eastern Australia is becoming drier under climate change, which is so important to understand for Australia’s agricultural industries, is more complex and uncertain. The record shows that rainfall has decreased over eastern Australia over the past 50 years, and decreased sharply in the past few years. Although these drying trends cannot yet be confidently linked to climate change, they suggest that long-term drying is a significant risk for Australian agriculture.

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FIGURE � Temperature anomalies across Australia for April �00�. Source: Bureau of Meteorology

Maximum Temperature Anomaly (oC)April �00�

Product of the National Climate Centre

© Commonwealth of Australia 2005, Australian Bureau of Meteorology

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4oC

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BOX �

The insurance industry, which is one of the first major industries to be impacted by climate change, has adopted the risk-management approach to deal with the increasing risk of losses from extreme weather events. Application of the risk-management approach by the insurance industry provides insights into how the approach can be applied to other sectors, such as agricultural industries.

Two aspects of the insurance industry’s approach to risk management are central to its success. First, the industry treats the risks posed by climate change in the context of other risks — political, economic, social, technological, environmental and legislative — rather than as a new and separate phenomenon that is dealt with in isolation from other risks. Second, there is a strong emphasis on review and monitoring on a regular basis, as information on climate changes and other risks to industry evolve. Thus, risk management is an ongoing process, not a one-off remedial treatment.

Scientific information is central to the insurance industry’s treatment of climate risks. In addition to keeping abreast of the fundamental climate science that provides basic understanding of climate change, the industry has invested in applied science to support its decision making. Research has generated quantitative damage functions that relate changes in climatic parameters to degree of damage; these are often highly nonlinear and provide important clues as to where critical thresholds lie. Probabilistic modelling of cyclone tracks, for example, helps to determine those regions most exposed to changing climate risks (see Figure 3). ‘Catastrophe modelling’ is used to simulate worst-case scenarios and to determine the vulnerability of the industry to low probability high-impact events. Such scientific information is a key part of the analysis of changing risk to extreme climatic events, which in turn is essential in setting premiums at levels that maintain the viability of industry.

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FIGURE � The risk of tropical cyclone strikes in Australasia, with dark red representing the highest risk and yellow the lowest.

Cyclone activity Low Moderate High

�0 Farming Profitably in A CHANGING CLIMATE • A Risk-Management Approach

The perspectives on climate risks and how they might change in future vary widely across Australia’s agricultural industries, depending on the characteristics of the industry and the climates of the regions in which they operate. For example, changes in temperature influence pests and disease distribution across northern Australia, and water availability in the irrigation districts of the Murray-Darling Basin. Nevertheless, there are some common features of industry responses to climate risks across most or all industries and regions. The risk-management approach is a powerful tool to identify management implications of those common features, while at the same time accommodating the different characteristics of regions and industries that require more specific and targeted management strategies.

�.� Sensitivity to climateAlthough the nature of climate risks is specific for individual industries, there are some general features of climate to which most Australian rural industries are sensitive. Most of these features are related to the hydrological cycle. Moisture availability, and particularly its timing through a growing season, is an overriding, critical issue across most agricultural industries. Other ‘derived’ climate parameters, such as stream flow, overland flow and relative humidity, are often more useful than rainfall in management applications. However, because they are derived from data with some uncertainties, the trends can be even more difficult to predict with confidence (see Figure 4).

In addition to these obvious generalities concerning water availability, specific industries are sensitive to several specific climatic features:

n Annual cropping — The grains industry, Australia’s largest crop-based industry, is sensitive to the timing of frosts and sowing rains. In addition, cumulative temperature impacts may be important, as well as increases in wind speed.

n Dairy cattle — The dairy industry is one of the more vulnerable rural industries to climate change, especially due to the sensitivity of dairy cattle to heat stress (high temperature coupled with high humidity). In addition, during drought, feed grain and water prices are often high, adding more pressure to the farming system.

n Sheep and beef cattle industries — The timing and seasonal patterns of rainfall for industries based on perennial vegetation is clearly important. In general, the extensive beef production industry has learned to cope with regionally variable rainfall; it is more adaptable than many rural industries. For the sheep industry, cold events (wind, rain, low temperature) are a common risk for recently shorn animals.

n Horticulture — Hail storms and frosts are major climatic risks for the fruit industry (see Figure 5). For apples and pears, the timing of rainfall is important (eg summer rainfall is a problem as well as rain at harvest); in dry conditions availability of irrigation water is crucial. Higher night temperatures can be a problem for some late harvested varieties of fruit. Chilling requirements are well known for many fruit varieties, and there are maximum temperature limits for some varieties.

n Viticulture — Timing of rainfall is critical for the viticultural industry. The biggest risk is late summer rainfall (January–February), which can lead to splitting, ringing, disease exposure and rot. In addition, wet summer conditions can lead to fungus and bacterial infection.

Agricultural industry perspectives on climate risks

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��Farming Profitably in A CHANGING CLIMATE • A Risk-Management Approach

n Plantation forestry — There is a wide range of climatic risks for plantation forests, especially at planting times and in the early years of growth. The cumulative impacts of temperature change, frosts and water availability are the main factors. Very low humidity is also an issue, because it can lead to tree stress, vulnerability to pests and diseases, and eventually tree death. Extremes of climate can be just as important as the cumulative effects, and soil water status, length of dry spells and high wind events are particularly important. However, there is much variation among different tree species towards this range of climate risks. Finally, there could be some positive effects of elevated CO2 on tree growth, but there is an associated issue of wood quality versus growth rate.

The second-order effects of climate change may be just as important as the first-order effects for the viability of agricultural industries. Of the second-order effects, changes in the distributions or incidence of pests and diseases are the most important for many industries. Examples include arbovirus, bluetongue, cattle ticks, buffalo fly (for the beef cattle industry), and invasion of tropical weeds in pastures in southern Australia. Animal pests, such as locusts, mice and cane toads, which are clearly sensitive to changes in climate, are a major threat to the cropping industry. For the plantation forest industry, a drying climate increases exposure to insect pests.

In summary, most Australian industries have learned to adapt to, and manage the risks associated with, a highly variable climate. Therefore, there is a general feeling across industries that they can handle gradual changes

FIGURE � Hail damage to nectarines in Swan Hill, Victoria. Photos: Victorian Department of Department of Primary Industries

FIGURE � Two scenarios of projected change in mean runoff in �0�0 for the Murray-Darling Basin, using different versions of a CSIRO regional climate model. Note that the two different model versions give significantly different projections, even for the direction of change for much of the basin. Source: Jones RN, CSIRO Marine and Atmospheric Research

CSIRO Mark � – �0�0 CSIRO DARLAM�� – �0�0

�� Farming Profitably in A CHANGING CLIMATE • A Risk-Management Approach

in the underlying climatic averages, even though it may involve shifts in the incidence of extreme events. This is discussed further in Section 3.3. The crucial issues are:

n whether climate changes at a rate to which producers are unable to adapt

n whether climate change occurs as major, abrupt shifts (partly because abrupt change is unexpected and therefore not planned for, and partly because such change may push some industries beyond their operational thresholds).

�.� Climate and decision makingA fundamental principle is that the entire process of managing for climate risks needs to be producer-driven rather than imposed by outside organisations. In general, Australian producers already have a large capacity to manage changes in climate, although there is a wide range in adaptive capacity depending on the industry. In addition, producers need consistent signals on how they need to adapt, and sufficient time to apply adaptation strategies.

The type of information required to analyse changing climate risks in the agricultural industries fall into two time scales, depending fundamentally on whether tactical (within season–annual) or strategic (annual–decadal) decisions are being considered. Tactical decision making requires seasonal forecasts of climate (see Box 4), and thus is directly linked to climate variability, whereas strategic decisions can benefit from longer term projections of climate change. Whatever the time scale of interest, a major problem from the producers’

perspective arises from multiple forecasting systems, which are confusing and undermine decision making. If possible, a consensus system with clear indications of the level of confidence in the projection being made is the best option.

Decision-support tools will be important in helping producers deal with a changing climate, particularly change in within-season variability. To be effective, such tools should start from a farm business perspective, use the language that farmers use, and be developed in partnership with industry. There are many existing decision-support tools widely used by industry that could be adapted to include climate risks as part of the decision-making process. A sound approach is to integrate changing climate risks with other factors that are important for decision making. Types of information that may be especially useful for individual producers include statistical analyses of seasonal rainfall patterns from past records, identification of analogue years, and identification of years with strong rainfall tendencies, such as El Niño and La Niña years.

Longer term change in climate risks presents challenges of a different nature. When dealing with longer-term climate change, ‘industry’ and ’farm’ responses may differ, and individual growers may have problems with a changing climate while an industry may remain viable at the national scale. For example, the wine industry is likely to remain robust and profitable under a changing climate because grapes are grown in a wide range of regions in various climatic zones. However, individual producers in certain regions may be impacted much more by a changing climate and may not remain viable.

Climate change will affect long-term strategic decisions, such as buying property or even staying in the agricultural business. Today, land prices are strongly influenced by perceptions of current productivity, but in future they might reflect the projected implications of climate change for productivity and thus could influence the location of industries on the landscape. Ultimately, this process could drive a shift in cropping regions — for example, moving the wheat belt northwards in Western Australia, where rainfall is likely to become more reliable than in the southwest corner.

Key pointA critical factor for Australia’s agricultural industries is whether climate change will appear as gradual changes in the underlying climatic averages, to which agricultural industries can adapt in many cases, or as abrupt or stepped changes that will severely impact industries’ capacity to cope.


BOX �

Producers and rural industries have consistently identified better predictions of within-season variability as a high priority for improved climate information. Significant improvements have been made over the past few decades in understanding and predicting climate on a monthly timescale. However, there is an intrinsic level of uncertainty in the climate system that limits the accuracy of predictions of within-season climate.

A good example is the El Niño phenomenon: accounting for it improves seasonal predictive capability but with limits to predictability. In Australia, El Niño is generally associated with drought, because it is often linked to reduced

rainfall in eastern and northern Australia, particularly during winter, spring and early summer. Each El Niño event is unique in terms of its strength (as measured by indicators such as the Southern Oscillation Index or changes in ocean temperature) and its impact on rainfall patterns (see Figure 6). The reliability of the impacts (or skill of prediction) varies from region to region and each El Niño event has its own lifecycle, limiting the predictability of how a particular El Niño event will unfold. Nevertheless, it remains the most useful medium-term predictor for future climates in Australia. A further complication is that severe droughts can sometimes result from relatively weak El Nino events, as occurred in 2002–03.

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FIGURE � Some El Niño-related drought areas between �� and ��. Source: information in Box 4 was adapted from the Bureau of Meteorology website1

1 See http://www.bom.gov.au

El Nino related drought areas in Australia since ��


However, many farmers may prefer to change industries and stay in the same location in response to climate change, rather than staying in the same industry and changing location. There may, however, be environmental issues to consider when contemplating a move into another region or type of land use, or a lack of infrastructure to support new industries in new regions. In other situations, it may not be necessary to consider moving at all. For example, there may be an opportunity for expanding the extensive beef cattle industry in central Australia if the climate becomes wetter there.

The plantation forestry industry has rotation cycles of 30–40 years and is particularly interested in climate change over longer timeframes. The demands on the scientific community for robust projections are especially severe, because most of the information needed for decision making is needed in the initial stages, when the decision of whether to go ahead with the project is made.

�.� Managing for a changing climate: avoiding risks and seizing opportunitiesParticipants in the workshop in Canberra agreed that the continuing work on managing the effects of present climate variability has been, and will continue to be, very important in building the capacity of producers and industry to farm profitably in the future. In addition to dealing with current variability, the current work will underpin adapting to longer term climate change. In that regard, climate change will only becomes an issue if it occurs faster than producers can adapt. However, it is difficult to know how producers can identify climate ‘change’, or how many years it will be before a change in variability or other changes to the current pattern are well enough established to be considered a ‘change’. When should producers make major changes to their businesses in response to perceived ‘change’? In general, there was a consensus at all the workshops that Australian producers already have a large capacity to adapt to changes in climate, although there is a wide range in adaptive capacity both within and between industries.

A number of generic issues are important in determining the nature of the management challenge associated with changing climate risks. These are outlined below.

n Autonomous adaptation (ongoing change in the agricultural sector that is occurring for reasons other than climate) can play a significant role in helping producers and industry adapt to changing climate risks. The abrupt change in rainfall in the southwestern corner of Western Australia, in which average winter rainfall decreased by 10–20% around the mid-1970s, is an example of autonomous adaptation. Much of the Western Australian wheat production zone lies in the region affected by the rainfall anomaly. Contrary to expectations, wheat yield has increased over the period of decreasing rainfall, because a range of changes in technology and management were adopted over the period for other reasons (see Figure 7). One such management change was the widespread adoption of no-till agriculture, which conserves soil moisture and allows the same or greater yield to be obtained with less

Key pointFor most Australian agricultural industries, within-season variability and the reliability of current patterns of variability remain the most important features of climate that affect profitability. The ways in which underlying long-term trends in climate affect within-season variability and its reliability are the most important features of climate change. A major exception to this generalisation is the plantation forest industry, where longer-term projections of climate change are at least as important as within-season variability, particularly when the initial decision of whether to embark on a plantation project is made.


rainfall. Other contributing factors included earlier sowings and growing other crops (such as lupins and canola) in rotation to reduce diseases and improve soil functions. On the other hand, these changes may also leave the industry less resilient to climatic extremes.

n Adaptation must clearly include matching the cropping system to climate, and producers can learn from other areas where the new climate already exits. Australia has a large advantage in this approach, compared with many countries, because our agricultural systems span a wide range of climates, from the tropics to the temperate zone. However, cropping systems must also have appropriate soil types, which may limit the amount of ‘climate-tracking’.

n Currently, marginal production areas may give insights into how well adaptation strategies might work, because these areas will be the first to experience the challenges of a changing climate (assuming that they become even more marginal) and are thus the first test-beds for adaptation strategies. The transition zone between cropping and grazing might be particularly sensitive to climate change.

n Matching market opportunities to the opportunities arising from a changing climate, for example by moving quickly into niche markets and higher value products, is an important adaptation strategy.

FIGURE �a Average annual winter rainfall (mm) for southwest Western Australia for the period ��–�00�. Source: Bureau of Meteorology

FIGURE �b Annual wheat yield (tonnes per hectare) for Western Australia for the period ��–�00�. Source: Australian Bureau of Statistics

West Australian Wheat Yield

West Australian Rainfall


n Although the risk-management approach must be producer driven, information provided by science and government is an essential supporting activity. Several types of information and delivery have been identified, including a systematic program of monitoring and mapping changes in farm practices; educational campaigns about the nature of, and risks from, climate change; and upgrading advice and extension services.

n Given the strong links between disease and climate or weather, using appropriate biosecurity measures is essential for maintaining profitability under a changing climate. Climate change will alter the risk of pest and disease invasions.

n Integrating climate risks with other environmental and production criteria into managing an agricultural business is an effective approach. Thus, managing for changing climate risks can be viewed as a key component in a more holistic approach towards natural resource management in general.

An important overall adaptation strategy is to increase the range of options that farmers have. These options can include the number of crop varieties (continual change in crop varieties is a normal part of the farming business), the types of management practices, the types of cattle breeds, and the types technological changes, such as modification of microclimate.

For animal-based industries, in some situations a shift to Bos indicus cattle and to non-Merino breeds of sheep that are better adapted to hot, dry conditions represent viable management options for a changing climate. Another strategy is to increase off-farm income opportunities, although this option may sometimes have adverse socioeconomic outcomes.

More detailed examples include:

n Breeding new varieties, which are important in the plantation forest industry, especially in hardwoods, particularly breeding salt-tolerant and drought-tolerant trees. In addition, management options to deal with drought are needed, especially at seedling stage. An example is the use of polymer gels on seeds to reduce vulnerability to planting-time droughts. A changing climate will also lead to possible expansions and contractions of the plantation industry across Australia. The

forest industries can use the wide range of provenances available to breed for climate adaptation. There are opportunities for using other management strategies to deal with changing climate risks. For example, soil moisture can be controlled to some extent by thinning plantations.

n Producers have access to a number of management options to cope with the risks of changing rainfall patterns. For example, careful management of the soil moisture profile may help viticulture cope with increasing summer rainfall. Better management of the soil moisture profile is important across most industries, and techniques that make best use of available soil moisture will be useful for responding to changing risks. Increasing atmospheric CO2 concentration may also provide benefits by increasing water-use efficiency and allowing the same yield for less water use.

�.� Maintaining and increasing profitabilityProducers have already learnt a great deal about maintaining profitability in a variable climate, and much of this knowledge will be useful for dealing with longer term change in climate. Many of these management strategies can be readily used or adapted to deal with the risks of a changing climate, while other risks present new management challenges that will require novel, proactive response strategies.

The additional challenge that climate change brings may be in areas outside the direct control of producers, such as international markets and water supplies. Collective government agreements, such as the National Water

Key pointA risk-management approach that is based on a holistic approach to climate change, taking into account changes in temperature, rainfall, humidity, winds, storms, etc, provides a sound framework for identifying, analysing, evaluating and dealing with the challenges and opportunities associated with climate change.


Initiative, are an example of a framework to consider these risks. The descriptions of potential adaptation strategies that follow are based on recommendations and suggestions from producers and industry representatives:

n The possible change in water availability caused by changes in the water supply industry as it simultaneously responds to changing demands (eg the demand for environmental flows) and a changing climate is a management factor beyond the direct control of producers. The cost and availability of water in the irrigation sector are particularly important. Managing water resources at every point from capture to ultimate use is crucially important; the imperative is to improve the water use efficiency of the whole production system. There are a number of long-term issues associated with water resources and a changing climate that will affect Australia’s agricultural industries, but over which agricultural industries may have little influence. These include decisions on investment in long-term water infrastructure, such as building dams, in response to

changing rainfall patterns; water allocation decisions in the context of a changing climate; and the value that Australian society as a whole places on water as it begins to deal with climate risks at the national level.

n Climate change will bring additional challenges to Australian producers as international competitors adapt their systems to a changing climate and thus change the nature of international markets (see Figure 8). For example, the Canadian agricultural industry is already planning to take advantage of the warmer temperatures and expand their grains industry northwards across the North American prairies.

Key pointThe key to managing profitably under a changing climate is flexibility and adaptability, with industry driving the process.

FIGURE � Country-level climate change impacts for the �0�0s based on cereal production potential on currently cultivated land: (a) Max Planck model; (b) Hadley Centre model; (c) Canadian model. Source: Fischer et al (2002)

Country level Climate Change

Impacts on Cereal

Production Potential on

Currently Cultivated Land

�0�0s

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CGCM�

Undefined> 50%20 to 50%5 to 20%1 to 5%-1 to 1%-5 to -1%-20 to -5%-50 to -20%< -50%Not assessed


�.� Policy and scientific research issuesManaging for climate risks is a responsibility of producers and the rural industries; however, coherent government policy and targeted, responsive scientific research can support the management approaches of industry. The consultations with industry have placed a high priority on the need to coordinate and integrate policies across governmental departments and agencies so that a consistent, effective and helpful approach to adaptation by government can be developed. Policy that is carefully formulated and delivered in an integrated manner will avoid adverse outcomes or distortion of decision making in counterproductive ways.

Industry perspectives on more specific policy options and issues include the following:

n Some existing policy instruments that are related to climate variability, such as exceptional circumstances (drought relief) could be adapted to deal with climate change. However, any modifications must be handled carefully, because what are now classified as ‘exceptional circumstances’ may no longer be exceptional under a changing climate.

n Climate change may place additional pressure on local governments in some cases if industries move away and land values decrease. Also, local governments may make decisions on land use and planning that do not adapt to climate change. Some local jurisdictions may need state or national government support and advice to deal with climate change issues, depending on how climate issues are dealt with in the context of strategic directions for rural Australia.

n Climate change raises difficult questions for structural adjustment. To drive the agenda and enhance opportunities for remaining viable in the face of a changing climate, the rural sector needs to be proactive about this issue.

n Policies developed for adaptation to climate change need to be supported by an effective implementation framework.

n Climate change considerations should be included in government programs that assist with farm planning and risk management more generally.

The challenges for the research community are no less daunting. The key messages from the agricultural sector are:

n Australia’s climate research community should continue to move towards more integrative, collaborative approaches and away from the fragmented and competitive mode that has sometimes typified climate research in the past. As a part of this approach, the industry based research and development corporations (RDCs) should set priorities for their contributions to climate change research.

n A more coordinated approach linking science and management on climate issues is required at the national level. A central role should be played by the Natural Resource Management (NRM) sector in terms of integrating climate issues with other, related issues (eg fire regimes, integrated pest management, water resources). Furthermore, mitigation and adaptation should be treated in an integrated way.

n Communication about the science of climate change must be better tailored for, and targeted towards, rural industries. In particular, it must meet the management needs of producers.

Key pointA coordinated approach is needed to deal effectively with climate change. This requires integration of effort and resources across the producer, industry, government and research sectors, as well as integration of approaches and strategies for adaptation to, and mitigation of, climate change. Such an approach should be built into a long-term vision for rural Australia.


This report provides a working base for further consultations and strategic actions with individual industries and across various regions. Industry consultations will be an ongoing process, and will refine and update industry perspectives on the nature of climate risks as more scientific information becomes available and as producers and industries gain more experience in dealing with the risks posed by a changing climate. This consultative process should guide the development of strategic actions, including the science-based tools and information required by the agricultural industries to manage climate risks.

The initial round of consultations, launched by the December 2004 workshop (‘Farming Profitably in a Changing Climate’) in Canberra, provided guidance for developing the first set of science-based tools to support the climate risk-management strategy, particularly Stage 3 (analysing the risks posed by climate change). The risk-management approach to climate adaptation represents a shift from the earlier climate scenario-driven approach to impact

studies, and has been referred to as a ‘second-generation approach’ by the Subsidiary Body for Scientific and Technological Advice of the UN Framework Convention on Climate Change. The second-generation approach emphasises the system that is being affected, particularly its vulnerability, resilience or adaptability to multiple interacting stresses, one of which is climate. Therefore, it will need a different set of concepts and tools to support the approach.

The concepts and tools will be developed, tested and further refined through the ongoing consultative process. The concepts and tools will address the two major timescales of interest identified in the Canberra workshop (within-season variability and the multidecadal planning horizon), as well as the major target audiences (producers, rural industries, and people who invest in them).

The research and development program is oriented around three activities, which are explained in the sections below.

The next steps in responding to a changing climate

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�0 Farming Profitably in A CHANGING CLIMATE • A Risk-Management Approach

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Analysis of statistical climate informationThis includes high-resolution statistical climate information on within-season patterns of variability, reliability, and implications for production for specific locations around Australia. Two existing tools — the Rainfall Reliability Wizard2 and the MLA (Meat and Livestock Australia) Rainfall to Pasture Growth Outlook Tool3 —provide basic information of this type. More sophisticated tools, such as Whopper Cropper4, extend this information to provide a range of potential yield or gross margin outcomes generated from 100 years of weather data. The challenge is to expand these and other similar tools to deal with underlying climate change in terms of changes in variability and reliability patterns (see Box 5). Tools like these will help producers judge whether the changes in climate patterns they are experiencing are connected with underlying trends in climate.

Analysis of synoptic patterns of climate changeThere is strong evidence that climate has been changing for the past 50 years at least. Analysis of how synoptic patterns of climate

have changed over this period can give insights into how historical patterns of climate variability are changing and why; and also give more confidence to those projections of climate change into the future that show similar changes in synoptic weather patterns to those already observed in recent decades.

General Circulation Model (GCM) scenarios of climate changeGCM outputs are the most common way of projecting future climates; however, there are associated uncertainties that require careful interpreting for impact studies. In this context, the information required by the agricultural sector is a careful, conservative interpretation of the reliability of future projections, and the cautions that should be taken into account when making decisions. Synthesising GCM projections using synoptic patterns of climate change and statistical climate information may improve confidence in GCM projections, particularly when the components are consistent with each other and with observed change. However, this method may increase uncertainty about other aspects of GCMs that are not consistent with observations, or that differ between GCMs.

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n diversity of industries within a region

n flexibility in livelihood and employment

n rainfall and temperature variability (indicators of sensitivity to climate)

n exposure to climate risks, based on a synthesis of Activity 1

n economic indicators (eg profitability, return on investment, export earnings)

n social indicators of adaptive capacity (eg educational level, social networks).

The above list is indicative only. Developing the appropriate set of indicators is an important aspect of the research effort within Activity 2.

Information on areas of regional Australia or sectors within agriculture that are particularly vulnerable to climate change will be useful both for policy development and industry regional planning. Activity 2 is aimed at producing vulnerability maps of rural Australia based on methodology that is now evolving internationally. The analysis will be built around layers of data in geographic information systems (GIS) and maps estimating the level of exposure from a changing climate, the sensitivity of the region or sector to climate risks, and the adaptive capacity of the region or sector (its ability to cope with climate risks). Data and maps that could contribute to a national level vulnerability analysis include:

n production trends and the historical impacts of climate variability on industry productivity

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2 See http://www.brs.gov.au/rainfall 3 See http://www.brs.gov.au/mlatool 4 See http:// www.apsru.gov.au/apsru


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n how adaptive capacity will be measured

n what are reliable indicators for quantifying adaptive capacity

n how adaptive capacity can be enhanced to deal with a changing climate.

An essential aspect of defining vulnerability is the degree to which producers, industries and rural communities have the capability to adapt to change. Ultimately, it is the resilience (or its inverse, vulnerability) to a changing climate that will determine whether the agricultural sector can deal successfully with climate risks. Although considerable fundamental research has been done on the concept of resilience, applying research to reduce climate risks in agriculture requires further work. Important research questions in the context of Australian agriculture and climate change include:

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Reliability is a feature of climate that has just as much importance for farmers as variability. Unfortunately, there is no simple relationship between variability and reliability, although sophisticated statistical techniques are beginning to make links in conditional terms. Thus, it may be possible to determine the likelihood that rainfall will be greater than, for example, 30 mm per month in each of three consecutive months (eg September–November) for a given location, if the historical pattern of variability is known. However, as underlying climate changes further, the reliability of the historical pattern of variability may change — an effect of vital importance to the agricultural sector.

Figure 9 shows mean winter (June, July, August, or JJA) rainfall for Australia, based on 100 years of monthly gridded rainfall data from the Bureau of Meteorology5. The zone of 125–175 mm of winter rainfall, shown as pale green, represents a significant proportion of Australia’s wheat belt (a winter crop in Australia). Two locations have been chosen for the purpose of this illustration: one in Western Australia (WA) and one in northern New South Wales (NSW).

The JJA mean rainfall for the WA site is 144 mm, only slightly higher than the NSW site’s 137 mm. Based on the mean rainfall, the sites appear similar; however, other statistics (such as JJA’s standard deviation or interquartile range) suggest that the NSW site may be more variable, although such measures are not easy to relate to reliability directly.

What reliability measures make sense to agricultural producers? Percentiles, standard deviations, standard errors or interquartile ranges are not generally used by producers. More useful measurements are often expressed in terms of a certain amount of rain over a specified period; these are called conditional probabilities. If winter (JJA) is considered as a whole, a typical question might be: how many times in 100 years has there been at least 150 mm rain during the winter? Surprisingly,

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(ie 38 out of 100) have received at least 150 mm; the probability for the NSW site is slightly higher at 41%.

The reliability of rainfall at the intraseasonal scale (ie within–season) is critically important for producers. If individual months are considered, rather than the season as a whole, more relevant questions can be asked. For example, how many times in 100 years has there been at least 25 mm in each and every month of winter? This measure of reliability is closely correlated with growth. In this example, 25 mm per month was chosen to suggest growing conditions unlikely to be limited by water; any other amount could be specified.

The results showed that the WA site experienced at least 25 mm per month in each month of JJA in 80% of the years — much higher than the equivalent figure of 29% for NSW. The table below summarises the findings. In the case of winter, the WA site is much more reliable at the intraseason scale, yet is virtually identical in terms of interseasonal reliability and the means.

TABLE � Summary statistics and terms

Measurement Western New South Australia Wales site site

1. Mean winter 144 137 rainfall

2. Interseason 38 41 reliability

3. Intraseason 80 29 reliability

Notes:

1 is in mm

2 is the per cent of years that at least 150 mm was observed in winter (the aggregate of JJA)

3 is per cent of years that at least 25 mm was observed in each of June, July and August.

5 See http://www.bom.gov.au/climate/austmaps/


FIGURE �0 Winter rainfall reliability.

Very low

Very high

Combined intra- and inter-seasonal reliability

FIGURE � Mean winter (JJA) rainfall in mm.

0 –�� – �� – �00�00 – �00�00 – �00�00 – �00�00 – �00�00 – �00

Mean winter rainfall in mm

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Figure 10 presents the results of an analysis of winter rainfall reliability that combined inter- and intra-seasonal reliability. The very low class has low reliabilities at both seasonal and within-season timescales. The very high class has a restricted distribution that does not correlate well with the distribution of mean winter rainfall. The difference between the two sites is obvious in Figure 10.

The significant message is that mean rainfall is not necessarily a good guide to agronomic reliability, whereas the inter- and intra-season reliabilities are direct measures that have agronomic significance. Given that there is ample evidence for climate change, being able to detect any consequential changes to reliability would be useful for agricultural producers.

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AcknowledgementsThis document is drawn directly from discussions and presentations from three workshops during the December 2004–April 2005 period; we would particularly like to thank the participants of those workshops for their time and valuable contribution to the development of this document. The workshops were:

n Farming Profitably in a Changing Climate, Canberra, 7–8 December 2004

n Pastoralists and Graziers Association Convention, Perth, 24 February 2005

n Acclimatising Agriculture for Climate Change Workshop, Queensland Farmers’ Federation, Brisbane, 8 April 2005.

In particular, the following provided material for the boxes:

n Box 1: Ian Carruthers, AGO, Canberra

n Box 2: Will Steffen, BRS and AGO, Canberra

n Box 3: Patrick Hickey, Aon Re, Sydney

n Box 4: Geoff Love, Bureau of Meteorology, Melbourne (and the Bureau of Meteorology website)

n Box 5: Greg Laughlin, BRS, Canberra.


Further readingAgriculture and Land Management Working Group (2003). Implications of Climate Change and Greenhouse Policy for Rural and Regional Australia, Government-Business Climate Change Dialogue, Commonwealth of Australia.

Allen Consulting Group (2005). Climate Change: Risk and Vulnerability: Promoting an Efficient Adaptation Response in Australia, Final Report to the Australian Greenhouse Office, Department of the Environment and Heritage, Commonwealth of Australia.

Bureau of Rural Sciences (2004). Climate Change: Adaptation in Agriculture, Science for Decision Makers, Bureau of Rural Sciences, Australian Government, Canberra.

Cox HW, Hammer GL, McLean GB, Cowlrick TH and King, CA. National WhopperCropper — Risk Management Discussion Support Software, Agricultural Production Systems Research Unit. http://www.apsru.gov.au/apsru/Products/Whopper/NationalWhopperCropper.pdf

Fischer, G., van Velthuizen, H.T., Shah, M.M. and Nachtergaele, F.O. (2002). Global agro-ecological assessment for agriculture in the 21st century: methodology and results. IIASA Research Report RR-02-002 International Institute for Applied Systems Analysis (IIASA), Laxenburg, Austria. 140pp. http://www.iiasa.ac.at/Admin/PUB/Documents/RR-02-002.pdf

Laughlin GP, Zuo H, Walcott J and Bugg A (2003). The rainfall reliability wizard — a new tool to rapidly analyse spatial rainfall reliability with examples, Environmental Modelling and Software 18(1): 49–57.

McCarthy JJ, Canziani OF, Leary NA, Dokken DJ and White KS (eds) (2001). Climate Change 2001: Impacts, Adaptation and Vulnerability, Contribution of Working Group II to the Third Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge University Press, Cambridge.

McKeon GM, Hall WB, Yee Yet J, Stone GS, Crimp SJ, Peacock A, Richards R, Tynan RW, Watson IW and Power SB (2004). Pasture Degradation and Recovery in Australia’s Rangelands: Learning from History, Queensland Government Natural Resources, Mines and Energy, Australian Greenhouse Office, and Climate Variability in Agriculture Research and Development Program.

Nelson R and Kokic P (2004). Forecasting the Regional Impact of Climate Variability on Australian Crop Farm Incomes, ABARE eReport 04.23, prepared for the Grains Research and Development Corporation.

Pittock B (ed) (2003). Climate Change — An Australian Guide to the Science and Potential Impacts, Australian Greenhouse Office, Commonwealth of Australia.

Standards Australia, Standards New Zealand (1999). AS/NZS 4360, Risk Management, Standards Australia/ Standards New Zealand.

Steffen W, Sanderson A, Jäger J, Tyson PD, Moore B, Matson PA, Richardson K, Oldfield F, Schellnhuber HJ, Turner BL and Wasson RJ (2004). Global Change and the Earth System: A Planet Under Pressure, IGBP Synthesis Volume, Springer-Verlag, Germany.

Web-based material on climate change:

http://www.bom.gov.au/info/GreenhouseEffectAndClimateChange.pdf

http://www.greenhouse.gov.au/science/index.html

http://www.bom.gov.au/climate/change/

http://www.cse.csiro.au/research/Program3/ozface.htm

http://www.greenhouse.gov.au/impacts/agriculture.html