Abstract
The extent to which enterprise mix diversification can mitigate climate induced variability in long term net returns from rainfed agriculture is assessed in this paper. Building on APSIM modelling, the assessment applies Monte Carlo simulation, probability theory, and finance techniques, to assess the potential for enterprise mix diversification to mitigate climate-induced variability in long term economic returns from rainfed agriculture.
The decision to switch from a non-diversified agricultural enterprise with the highest expected return to a diversified agricultural enterprise consisting of a mix of agricultural enterprises was analysed.
Correlation analysis showed that yields were not perfectly correlated (i.e. are less than 1) indicating that changes in climate variables cause non-proportional impacts on yields. Results show that diversification can reduce the expected net returns by up to A$96ha-1 and reduce the maximum probable net gain by up to A$602ha-1.
The decision to switch from a non-diversified agricultural enterprise with the highest expected return to a diversified agricultural enterprise consisting of a mix of agricultural enterprises was analysed.
Correlation analysis showed that yields were not perfectly correlated (i.e. are less than 1) indicating that changes in climate variables cause non-proportional impacts on yields. Results show that diversification can reduce the expected net returns by up to A$96ha-1 and reduce the maximum probable net gain by up to A$602ha-1.
| Original language | English |
|---|---|
| Pages (from-to) | 1-14 |
| Number of pages | 14 |
| Journal | Australasian Agribusiness Review |
| Volume | 21 |
| Publication status | Published - 2013 |
| Externally published | Yes |
