A new study by the University of California San Diego School of Global Policy and Strategy seeks to predict the financial impact that changing of the climate will have on the agriculture industry.
The study, published in the Proceedings of the National Academy of Sciences journal, also examines ways in which food security and financial stability measures can be interlinked in countries prone to climate catastrophes.
It uses climate and agricultural data from Brazil, which demonstrates that a changing climate has a ‘cascading effect’ on farming, leading to increased loan defaults for one of the nation’s largest public sector banks.
According to the authors, over the next three decades, climate-driven loan defaults could increase by up to 7%.
Brazil experiences substantial variation in temperatures from region to region, underscoring the need to develop distinct types of physical and financial resilience – for example, in the north of the country, dramatic seasonal swings are more likely in the coming years, while central Brazil will have more steady weather, albeit experience higher temperatures.
Different adaptations
“A difficulty in studying climate impacts on agriculture is that there are all sorts of adaptations happening all the time that aren’t easily observed, but are really important for understanding vulnerability and how risk is changing,” commented report co-author Jennifer Burney, professor of environmental science at UC San Diego’s School of Global Policy and Strategy and Scripps Institution of Oceanography.
“We were able to distinguish signals from different types of climate impacts and which ones led to this larger financial risk.”
Resilient food security
According to the authors, the report aims to bolster resilient food security amid climate changes. This entails discerning how minor climate variations might have significant repercussions, extending beyond regions or sectors through mechanisms like trade and finance.
For instance, certain governments in the Western Pacific region procure additional food from the global market during emerging El Niño periods, compensating for diminished local crop yields.
The statistical methodology employed in the study offers a means for governments globally to grasp their unique climate dynamics and determine whether local, regional, or international institutions are most suited to mitigate associated challenges.
“The technique we developed will help populations identify where they are most vulnerable, how climate change will hurt them the most economically and what institutions they should focus on to build resilience,” added study co-author Craig McIntosh, professor of economics at the School of Global Policy and Strategy.
Read the full study here.
