Modelling the climate, water and socio-economic drivers of farmer exit in the Murray-Darling Basin

Absolute farm numbers all over the world have been decreasing over time, and in many countries, this is a source of concern for rural communities. In particular, the Murray-Darling Basin (MDB) in Australia has faced considerable change in the form of increased temperatures and drought severity, reduced irrigation water diversions, declining real agricultural commodity prices, and declining rural community services. This study applies spatial regression modelling at the regional level to assess the impact of weather, economic, and water factors on net farmer number changes over a 20-year period from 1991 to 2011, with climate risk measured using data from 1961 onwards. Our analysis suggests that the direct drivers of farmer exit in local areas were climatic (e.g. increases in maximum temperature and increased drought risk (through decreased long-term precipitation skewness and increased long-term precipitation kurtosis)) and socio-economic (e.g. decreases in commodity output prices, increased urbanisation and higher unemployment). Contrary to the current narrative, changes in irrigation water diversions and water trade movements had no significant impact on MDB farmer exit.