Climate Change and the Economics of Farm Management in the Face of Land Degradation: Dryland Salinity in Western Australia

Projected changes in climate would affect not only the profitability of agriculture, but also the way it is managed, including the way issues of land conservation are managed. This study provides a detailed analysis of these effects for an extensive dryland farming system in south-west Australia. Using a whole-farm linear programming model, with discrete stochastic programming to represent climate risk, we explore the consequences of several climate scenarios. Climate change may reduce farm profitability in the study region by 50% or more compared to historical climate. Results suggest a decline in the area of crop on farms, due to greater probability of poor seasons and lower probability of very good seasons. The reduced profitability of farms would likely affect the capacity of farmers to adopt some practices that have been recommended to farmers to prevent land degradation through dryland salinization. In particular, establishment of perennial pastures (lucerne or alfalfa, Medicago sativa ), woody perennials ("oil mallees", Eucalyptus spp.), and salt-tolerant shrubs for grazing ("saltland pastures", Atriplex spp.) may become slightly more attractive in the long run (i.e., relative to other enterprises) but harder to adopt due to their high establishment costs in the context of lower disposable income.