A team of researchers at the University of California San Diego School of Global Policy and Strategy has created a new approach for estimating the economic consequences of climate change on agriculture. This method aims to assist in ensuring food security and financial stability for nations that are becoming more vulnerable to climate-related disasters. The findings were published today in the esteemed journal PThe research, published in the Proceedings of the National Academy of Sciences, uses data on climate and agriculture in Brazil. It shows that climate change is affecting farming, which is leading to more loan defaults for one of the country’s largest public sector banks. The study predicts that over the next 30 years, climate-related loan defaults could increase by as much as 7%.
The study’s findings also highlight that while temperatures are rising globally, there is significant variation in how this is impacting different regions. This emphasizes the need to develop specific forms of physical and financial resilience for each area. An example of this is…In approximately 2050, the northern regions of Brazil are expected to experience more drastic seasonal changes, with heavier precipitation in the winter and drier summers. This calls for consideration of water storage solutions such as the construction of dams and reservoirs, along with an increase in groundwater storage capacity. On the other hand, central Brazil is projected to have relatively stable weather patterns but higher overall temperatures, indicating the necessity for the cultivation of heat-resistant crops.
The authors of the study utilized a statistical methodology that involved analyzing historical climate data in Brazil and correlating it with data on crop productivity, agricultural revenue, and the performance of agricultural loans. By combining these datasets with climate projections, they were able to make informed predictions about the future climate and its potential impact on agriculture.mate simulations are used to forecast future weather patterns and their effects on agriculture, as well as the potential impact on financial institutions. According to Jennifer Burney, a professor at UC San Diego’s School of Global Policy and Strategy and Scripps Institution of Oceanography, studying climate impacts on farming is challenging due to the constant, often unobservable adaptations that are crucial for understanding vulnerability and risk. The team was able to identify signals from various climate impacts and determine which ones contributed to the changes.
Building resilience against climate change is a crucial aspect of global thinking. The research aims to facilitate food security that can withstand the challenges of a changing climate. It is important to recognize that even small shifts in climate can have significant impacts, affecting multiple regions and sectors such as trade and banking.
Recognizing the systemic risk presented by climate change is particularly beneficial for policymakers and relief agencies. Climate change is now widely viewed as a national security threat, making it essential to understand and address these risks.
With that goal in mind, the study’s statistical approach has the potential to be utilized on a global scale.
“The method we have developed will assist populations in identifying their areas of greatest vulnerability, understanding how climate change will impact them economically, and determining which institutions to prioritize in building resilience,” explained Craig McIntosh, a coauthor of the study and a professor of economics at the School of Global Policy and Strategy.
For instance, in years of emerging El Niño, some governments in the Western Pacific region purchase additional food from the global market when their own crop yields are affected. The statistical approach employed in the study could aid these governments in identifying the most effective strategies.Governments worldwide are striving to understand their unique climate circumstances and determine whether local, regional, or international organizations are best suited to tackle them.
This research could prove particularly valuable in the establishment of the loss and damage fund created by the United Nations in 2022. The fund aims to assist developing countries that have made minimal contributions to the climate crisis but are experiencing the worst effects such as floods, droughts, and rising sea levels.
“Our method could aid nations in identifying where the greatest resilience dividends could be gained from their investments,” stated Krislert Samphanthar.ak, an economics professor at the School of Global Policy and Strategy, mentioned that this method can also help determine the need for international reinsurance.”
The study “Empirical Modeling of Agricultural Climate Risk” was coauthored by Bruno Lopez-Videla, who recently obtained a Ph.D. in economics from UC San Diego, and Alexandre Gori Maia from the Universidade Estadual de Campinas in Brazil.