Drought policy, climate change and the new normal.

Climate change is fundamentally changing the exposure of Australian agriculture and regional communities to drought. As the nature of drought and our understanding of its consequences evolves it is sensible to question the suitability of our current policy responses.

Aither is often asked to provide advice to government on natural resource management issues where policy responses are contested. Central to many of these debates are real or perceived trade-offs across values. For example, trade-offs across environmental, social and economic values; between short-term and longer-term benefits; and across public and private benefit. Navigating these debates often requires a clear articulation of the problem at hand and consideration of the role of government in addressing market failure and promoting equality.

To help shed some light on some of these issues Aither Senior Associate (and former Managing Director of the Rural Industries Research and Development Corporation), Craig Burns, provides insights into what government and industry have learned from past droughts and the policies and investments that will make us well placed to navigate current and future climate variability.

Q: Do we have or need to have a new definition of drought given the current and predicted effects of climate change?

I wouldn’t say we need a new definition, but we certainly need to change how we think about drought. Climate change will lead to an increase in the frequency and severity of drought in addition to increased temperatures and more extreme weather events such as storms. So, the traditional Australian view that drought is part of the natural fabric of the Australian environment may underestimate the capacity for drought to move towards a ‘new normal’. In simple terms, farmers are likely to have more bad years than they used to.

Drought is defined by the Bureau of Meteorology (BOM) as rainfall over a three-month period being in the lowest decile of what has been recorded for that region in the past. This doesn’t consider increased temperatures driven by climate change that affect evaporation and soil moisture. Therefore, even with the same amount of rainfall the land will become drier more quickly.

How we define drought is perhaps less important than having more consistent and accurate predictive data and analysis tools that enable better understanding of conditions at the regional and local scale. Combining data from the BOM with private on farm data presents an opportunity to better understand, predict and tailor responses to changes in micro and macro climate conditions. This means that, irrespective of how drought is defined, industry is making itself responsive and resilient to bad times and more able to make the most of the good times.

Q: What are the key public policy lessons government has learned from past droughts?

During a drought the media focuses on immediate impacts and the need for ‘drought relief’. Politicians have tended to respond to this with ‘packages’. However, each successive severe drought has taught us lessons about what does and doesn’t work in the long run. There is now wide-spread agreement from industry experts that improving drought preparedness and land management practices, including on-farm productivity, is a better long-term approach. We have learnt that ‘drought relief’ can have unintended consequences which can be a disincentive to implementing longer term management practices and adoption of financial risk tools and products to improve risk management. The preferred approach is now provision of short-term safety nets which support incomes and welfare of communities rather than production linked subsidies.

However, the focus on drought policy typically fades when a drought breaks. This means we still haven’t developed a sustained and nationally consistent drought policy focused on long term preparedness and resilience. We need to be encouraging natural resource management practices, in good times and bad, that enhance the productive capacity of the land and take into account the likely changes in rainfall, temperature and soil quality that will come with climate change. To effectively execute this drought policy needs to viewed through a long-term climate change lens.

Q: The Future Drought Fund will make $100 million available in both 2020 and 2021. What should be the priorities for allocating this funding?

Investment in improved varieties and technologies and enhancing the capacity of the BOM to predict and model future drought conditions is likely to lead to the greatest long-term resilience benefits. However, $100 million can be quickly absorbed across R&D and may not be sufficient without further cooperation and contributions from other government research bodies.

In addition to R&D it is important to build the resilience of rural communities to meet the challenges of long-term climate change and short-term drought and extreme weather events. Australia led the way with Landcare which enabled communities to tackle environmental challenges in a joint way. Community-based programs are a good way to bring farmers and their communities together to address local challenges.

Finally, there is also a case for looking at how government can encourage the uptake of commercial risk management tools including farm income insurance. There has been a slow uptake of tools such as multi-peril crop insurance and there may be an ‘infant industry’ argument for the government providing incentives to encourage farmers to adopt these tools.

All these investments are focused on making industry more resilient to their specific risks while reducing the need and pressure for government to make drought ‘relief’ payments.

Q: Is there an inherent conflict between the objective of improving drought resilience through on-farm productivity and supporting the long-term viability of regional communities?

Australia’s improved production capacity has come from the adoption of new technology and resilient plant and animal varieties. Farms that adopt new technologies, introduce new varieties and are agile to changes in market demand and preferences remain viable in the long term. However, the adoption of productivity improving technologies by smaller farms is a challenge, as is the ageing agricultural workforce and education levels.

These factors, combined with broader economic circumstances, have seen a trend towards larger and fewer farms. This has contributed to fewer on-farm jobs and the decline of some smaller communities.

The long-term viability of regional communities will always be closely linked to the productivity of the agricultural regions they serve. However, regional development is part of broader economic and policy settings and agricultural policy should not be mistaken for regional policy.

Craig Burns has over thirty years’ experience working in agricultural and resource development policy. He was Managing Director of the Rural Industries Research and Development Corporation (RIRDC) from 2010-2016. Prior to this, Craig held senior positions in the Australian Government, mainly in the areas of agricultural trade, biosecurity, resource management and R&D.