This dissertation examines farm adaptation and risk management issues under global climatic change in a tri-journal article framework. The decision-making environment of a commercial corn, soybean and wheat producer in Henderson County, Kentucky serves as the study locale. The primary motivation for the study arises out of a need to investigate the impact of future weather variability on farm risk management, and the inclusion of multiple risk sources and adaptation avenues in the new decision environment created by global climatic change.
The chapters in the dissertation examine farm adaptation across levels of producer risk preferences with an emphasis on providing a range of production risk as well as adaptation avenues under weather variability incorporated future climate scenarios. Production risk sources included are uncertainty in crop yields, crop output prices and suitable field day availability. Adaptation avenues include enterprise diversification, alternative production practices like plant population, maturity groups and planting dates, custom hiring for field operations and marketing avenues like option to store crop produce. Quadratic programming under an expected mean-variance framework and discrete sequential stochastic programming (DSSP) techniques are employed for the purposes of the study.
Future weather scenarios for the study were obtained using estimates from the Goddard Institute for Space Studies (GISS) Global Circulation Model (GCM) for the Southeastern United States.Results from the study indicate that climatic change is expected to result in positive changes to farm profitability across levels of producer risk preference. Risk neutral and low levels of risk aversion will gain greatest benefits from the new production environment under climatic change. This is directly linked to the ability of producer to take advantages of the avenues available for adaptation. Adaptation response included movement to greater number of planting dates and greater diversification in alternative production strategies under climatic change, resulting in intensive set of farm operation over the cropping period. The mode of adaptation was directed to take advantage of the longer growing season as well as higher temperature experienced under climatic change. Specifically, this led to a general shift to earlier corn planting and greater range of soybean planting compared to the historical cropping pattern. Producers under climatic change also chose higher maturity groups to tolerate the higher mean temperatures. No major shifts in crop enterprises are noticed but changes in production and management practices are expected. Agronomic crop yields under climatic change resulted in an increase in soybean and wheat yields along with very small decreases in corn yields. However, double cropped soybean experienced severe losses in yields under climactic change.
It is important to emphasize that these positive changes occur in an environment that is indeed riskier and therefore provision of adaptation avenues is critical. The analysis suggests that production risk from lack of suitable field days will increase under climatic change calling for increased demand for custom hiring of field operations. Again greater investment in agricultural machinery may be another adaptation response to the shock. Marketing strategy under climatic change calls for increased number of weeks under storage and a staggered approach to crop sales. The underlying message through the studies conducted in this dissertation is that given sufficient avenues for adaptation and knowledge base, producer in the region can manage shocks from future climatic change efficiently.