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Climate change and Resilience of Agricultural System: an econometric and computational analysis

Periodic Reporting for period 2 - CRAS (Climate change and Resilience of Agricultural System: an econometric and computational analysis)

Reporting period: 2020-08-10 to 2021-08-09

Priorities of the current and future European Common Agricultural Policy (CAP) are to enhance the climate change resilience of European agriculture, increase climate change adaptation and protect biodiversity. Biodiversity is now a considered part of the EU’s economic growth strategy. The EU Biodiversity Strategy to 2030 “Bring nature back into our lives” aims to restore ecosystems and ecosystem services and to improve biodiversity, the ultimate goal being to increase resilience to future shocks. The Farm to Fork Strategy aims at reducing the environmental and climate footprint of the EU food system and strengthen its resilience.
Agrobiodiversity conservation at the global, regional and farm levels can provide natural adaptation and insurance to farm households as well as resilience to farming communities and sustainability. In particular, agrobiodiversity is increasingly regarded as a key component for the future adaptation of agriculture to a changing climate.
Climate change Resilience of Agriculture System (CRAS) project aims to better understand the contribution of agrobiodiversity to the resilience of agroecosystems. The overall objective of the CRAS project is to assess whether agrobiodiversity conservation can support long-run agricultural productivity amid climate change. The project is developed coupling econometric and computational models. The analysis focuses on southern European countries (namely Portugal, Spain, France, Italy and Greece) whose agriculture sector has been shown to be particularly vulnerable to climate change impacts.
Overall the project has:
• increased the methodological and core knowledge on adaptation through agrobiodiversity conservation of the agriculture sector.
• advanced the economic assessment of the impact of agrobiodiversity on long-run farm net productivity coupling econometric and macroeconomic models.
• improved the empirical foundation of Integrated assessment models and enhanced the modelling and assessments of adaptation policy of biodiversity conservation.
• exposed the debate on biodiversity conservation and climate change from the research area to the policy arena and non-scientific audience.
Key projects objects are the assessment of the contribution of agrobiodiversity to the economic resilience of the agriculture sector and the valuation of policies for the conservation of agrobiodiversity.
The econometric analysis explores whether farmland value (long run agricultural productivity) is affected by agrobiodiversity both at local scale and at regional scale. Agrobiodiversity is measured by richness of agricultural land cover types, their even distribution and the Shannon index. It also includes seasonal climate to understand how precipitation and temperatures affect farmland values. The results support the literature on climate change impact on agriculture, seasonal climate affects farmland value and effects are not evenly distributed. However, the focus of the econometric work is on the effect of local and regional agrobiodiversity on farmland values. Agrobiodiversity affect farmland values and the effect is often nonlinear. The effect of regional agrobiodiversity is larger than the effect of local agrobiodiversity. The Shannon index and evenness have a convex effect on farmland value and richness has a concave effect on farmland value. These complex effects are introduced into ICES CGE model to determine how the economy would respond if agrobiodiversity was increased by about 10%. Results show substantial economic impacts on the agricultural sector, although they differ greatly among measures of agrobiodiversity and their scale. Direct impact propagates to the whole economy affecting considerably the food industry and the services sector of the region where the change occurs, but also of the neighboring regions. Results, however, are not predicted to be the same across southern Europe. In particular, agrobiodiversity often has the opposite effect on France and Italy compared to Spain and Portugal and Greece. The study finds that the overall effect of agrobiodiversity on GDP is quite similar to the direct effect predicted in the agriculture sector.
Outcomes are firstly of academic relevance and accordingly have been and will continue to be disseminated and exploited through research papers on peer-reviewed journals. Two research papers have been completed. The first paper is based on the results of the econometric analysis and it is under the final review in the Ecological Economics journal. The second paper couples the econometric and CGE analysis to assess the value of agrobiodiversity. These results have been also disclosed to targeted audience and the general public through a variety of activities. Articles on newspapers and podcast, online seminars and webinar, Informative speeches to policy maker, international conferences. In addition the fellow has been awarded with the 2021 Bologna Award –The International Sustainability and Food Award.
Although a wide literature analyses the impacts of climate change on agriculture, the link between biodiversity and the resilience of agricultural systems is still largely underexplored. The vast majority of economic studies on agrobiodiversity concentrates on the contribution of plot scale and within farm biodiversity to agricultural productivity or risk exposure and present evidence from a country at best. New research is thus required to encompass farmland values (a proxy of long run net revenues), to broaden the knowledge from a fine spatial scale to a larger spatial scale (from within-farm agrobiodiversity to landscape agrobiodiversity) and to widen geographical reach. The assessment of the contribution of agrobiodiversity to farmland value is the first step to evaluate policy increasing agrobiodiversity, however a thorough evaluation should include the whole economy. As far as we know no studies have assessed the macroeconomic impacts of agrobiodiversity conservation policy.
Overall the CRAS project goes beyond the state of the art and contributes to increase the knowledge of:
• the empirical relation between landscape agrobiodiversity and land value of the agriculture sector.
• the macro-economic implications of agrobiodiversity conservation assessing its effect in terms of changes of agricultural production and gross domestic product.
• the impact of policies for the conservation of agrobiodiversity for the whole economy.
The results obtained by the analysis are richer than originally expected. Outcomes are firstly of academic relevance. Results have also strong policy implications. Agrobiodiversity has a large potential effect on the farm sector. However, there is no universal biodiversity policy that should be overlaid across southern Europe. Rather, each country, and each region within each country needs to tailor their agrobiodiversity policy to fit their situation. In addition, the results of the action provide a precise economic estimate of a varied of agrobiodiversity policy on farm productivity at NUTS3 scale and of the impact of those measures on the economy of each NUTS2 region and the whole country. Those estimates can guide policy makers in the choice of measures to preserve agrobiodiversity across regions and actively contribute to the implementation of the EU Biodiversity Strategy to 2030 and The Farm to Fork Strategy. The results of the CRAS action can therefore potentially benefit the society at large.
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