Effect of Climate Change on Farmers' Choice of Crops: An Econometric Analysis
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Climate change is being observed through increased average temperatures world-wide, as well as through increased frequency of extreme events, such as floods and droughts. As climate is an uncontrollable yet essential input in the agriculture industry, the impact of climate change may have on crop production in Saskatchewan is of importance. The main objective of this study is to investigate how farmers adapt to climate change by switching their crop mix, and how this crop mix may change under future climate change scenarios. A fractional multinomial logit (FMNL) model was used to assess how total area of cropland has changed over a thirty year time period. The panel data included variables to represent the land characteristics of Saskatchewan (i.e. the three major soil zones - Black, Dark Brown and Brown), climatic variables to represent average monthly temperature and precipitation, and price and policy variables in order to assess how average seeded area of each crop group changed. With these results, a simple simulation model was developed to evaluate how the area of each crop group in a base year comparison (2000) would change under future climate scenarios for each soil zone. The results from the FMNL model indicate that crop allocation depends largely on the price of other crop groups and temperatures in the spring (April) and summer (July). Climate plays and important role in the major crop groups, such as wheat, canola and pulses. Cool, dry springs are the ideal conditions when choosing nearly all crops, while hot, wet summers increase the choice to leave land to summerfallow. Policy and the different soil zones also play a significant role in area allocation decisions. Changes in policies such as the removal of the Crow’s Nest Pass Agreement, and the removal of oats from the Canadian Wheat Board (CWB) marketing, had a negative impact on the choice to grow wheat, as expected. The different soil zones in Saskatchewan played an important role in area allocation for a majority of the crops, having a negative effect on the choice of wheat over every other crop group except pulses and summerfallow. Three climate change scenarios were simulated for each soil zone and compared to a base area (year 2000 area seeded) of crop groups. The findings from the projected changes in climate indicate that the area allocated to wheat will continue to decrease into the future, following current trends. The average projected decline in wheat area from the base years by 2099 ranges between 3.5% to 4.6% in the Black soil zone, between 2.7% and 2.9% in the Dark Brown and 2.7% to 4% in the brown soil zone, depending on climate change scenario. Interestingly, the area left to summerfallow is projected to increase over the future climate change scenarios. The choice of wheat is preferred over pulses, feed and forages, while the choice of specialty oilseeds (flaxseed, mustard seed and canary seed) are projected to become preferred over wheat in the future. The major conclusion from this research are: (i) following current trends, the area devoted to spring wheat and durum wheat would continue to decline into the future; (ii) Area devoted to wheat remains a preferred choice over pulses, feed and forages while specialty oilseeds represent a viable alternative choice to wheat and (iii) most significantly, summerfallow area would increase. This is in contrast to the current trend of declining summerfallow area as a result of tighter crop rotations. This finding was observed throughout all three soil zones as well as for all three climate change projection periods. This will have major implications on individual farmers as well as the economy in Saskatchewan, as summerfallow does not produce a crop in the year it is chosen. It is therefore important to determine a possible new crop mix that would benefit from the projected change in climate. This study could be improved by including a measure of profitability for each crop group and introducing a new crop group that is better suited to the projected change in climate in Saskatchewan.
DegreeMaster of Science (M.Sc.)
DepartmentBioresource Policy, Business and Economics
CommitteeBelcher, Ken; Micheels, Eric; Wheaton, Elaine
Copyright DateOctober 2013
Agriculture, climate change, crop choice, Saskatchewan, fractional multinomial logit, panel data