Temperature-Rainfall Anomalies and Climate Change: Possible Effects on Australian Agriculture in 2030 and 2050

Australia is a food-surplus country with much of its landmass located in arid or semi-arid areas subject to extreme variation in both precipitation and summer temperatures. The possible economic effects of climate change on water in relation to Australian agriculture are analysed by region and sector, including its possible impacts in Australia’s ‘food basket’, the Murray–Darling Basin, using precipitation and temperature data from 2011 to 2020. Three scenarios are evaluated that include: (1) the decade 2011–2020; (2) a ‘2030’ scenario in which farm productivity falls by 10% relative to the 2011–2020 scenario in five of the 10 growing seasons; and (3) a ‘2050’ scenario in which farm productivity falls by 20% relative to the 2011–2020 scenario in five of the 10 growing seasons. The welfare impacts, on a national basis, of the first scenario relative to a baseline without year-on-year seasonal variations is minus $35 billion in net present value terms. The welfare impact in the second scenario is minus $46 billion and minus $59 billion in the third scenario. The findings support the selection and implementation of particular adaptation pathways in response to climate change for Australian agriculture.