A risk management framework for assessing climate change impacts, adaptation and vulnerability

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1 A risk management framework for assessing climate change impacts, adaptation and vulnerability David Cobon, Grant Stone, David McRae and colleagues Queensland Climate Change Centre of Excellence

2 Outline Impacts Adaptation approaches Adaptation process and risk management Introduce the Risk Matrix grazing example Explain the risk matrix process using a Dairy example Impact Impact risk = likelihood * consequence Vulnerability = impact risk * adaptive capacity Risk statements

3 Australia s climate has changed Temperature: 0.9C warming since Greatest warming in eastern and central Australia, with more extremely hot days and fewer frosts Rainfall: wetter in the northwest and drier in the southwest and east

4 What about the future? Trend upward certain CO 2 will rise (how much depends on us) Temperatures will rise ( C: 2030, 1-5 C: 2070) Sea level will rise (?>1m by 2100) Ocean will acidify Likely but direction of change spatially variable Rainfall will probably change (wetter NW, drier S & E) Storms/cyclones will probably intensify High end extremes will be more likely (and may co-occur and be more pronounced and of longer duration ) Heatwaves, drought, fires, hail, floods Low end extremes will generally decline (e.g. frosts)

5 Climate effects on animals 65% Current heat stress 35% Percentage of days with heat stress Heat stress 2.7 o C warmer 85% 85% 5% Source: Howden et al %

6 Adaptation The international community is too late with effective mitigation to avoid significant impacts. It may yet fail to put in place substantial mitigation, in which case the challenge of adaptation to climate change will be more daunting. As a nation, Australia has a high level of capacity to plan for and respond to the impacts of climate change that is, its adaptation potential is high. Garnaut Climate Change Review July 2008

7 Adaptive capacity & vulnerability of different sectors Agriculture vulnerable at warming of >3 o C Natural ecosystems vulnerable at warming of >1.5 o C IPCC 2007

8 Differentiating Adaptation Differentiating Adaptation There are two points of action: mitigation (addressing the cause) and adaptation (planned response to the changes) Adaptation is the decision-making process and actions of adjusting practices, processes and capital responses undertaken to maintain the capacity to deal with current or future predicted change. Mitigation has a focus on technologies (renewables, CO 2 capture and geo-sequestration, geothermal, biofuels, energy efficiency) and hard economic mechanisms (emissions trading scheme) to reduce emissions.

9 Adaptation Options Incremental - largely maintaining existing activities and building on existing technologies; reactive and proactive Transformational major changes in enterprises, land use and human and social capital; largely proactive and strategic

10 Adaptation process

11 Purpose of Risk Management Framework Study Climate change projections are uncertain Climate change impacts are complex Interacting and opposing biophysical processes Need for climate change assessment for agriculture Identifies areas for research and development Means of engagement with industry Adaptation strategies need to begin now Vulnerability assessment feedback can inform policy Identifies adaptation short-term (incremental) or restructure in long-term (transformational)

12 The Risk Management Matrix approach Elements of industry (Grazing) Climate Change Factors CO 2 Temperature Rainfall Hot days >35 o C Pasture Water Animals $ Biodiversity Human health and well-being + ive - ive Overall impact -ive

13 Impact on key elements of industry or business Industry element Positive impacts Climate factor Negative impacts

14 Completed Impact risk matrix. Overall estimate of impact and risk

15 Identifying the most vulnerable components

16 Table 1. Example impacts and the level of impact risk associated with climate change for the Dairy Industry in Queensland. Step 1a. Assign important climate variables and elements of dairy industry important for a profitable and sustainable business Feature of climate change Climate Variable 1. More days over 35oC High Confidence 2. More droughts Medium to High Confidence 3. Increased storm intensity same total rainfall Moderate Confidence Overall estimate of Risk (based on rows above) Forage yield and quality A Milk yield and quality Animal Health and Reproduction B C

17 Table 1. Example impacts and the level of impact risk associated with climate change for the Dairy Industry in Queensland. Industry element Forage yield Climate Variable 1. More days over 35oC A reduce forage growth Step 1b. Working with one cell at a time, discuss the likely interaction of an industry element with the corresponding climate variable and make a comment about the possible impact.

18 Table 1. Example impacts and the level of impact risk associated with climate change for the Dairy Industry in Queensland. Industry element Forage yield Climate Variable A reduce forage growth 1. More days over 35oC Negative impact Likelihood:?? Consequence:?? = Impact Risk?? Step 1c. Decide whether the impact is negative or positive

19 Table 1. Example impacts and the level of impact risk associated with climate change for the Dairy Industry in Queensland. Industry element Forage yield Climate Variable A reduce forage growth Negative impact 1. More days over 35oC Likelihood:?? Consequence:?? = Impact Risk?? Step 1d. Assign an impact level or risk this is a function of likelihood and consequence.

20 Appendix 2. Likelihood of recurrent and single events occurring given that the climate changes Rating Recurrent events Single event Almost certain Could occur several times per year More likely than not - Probability greater than 50% Likely May arise about once per year As likely as not - 50/50 chance Possible May arise once in 10 years Less likely than not but still appreciable - Probability less than 50% but still quite high Unlikely May arise once in 10 years to 25 years Unlikely but not negligible - Probability low but noticeably greater than zero Rare Unlikely during the next 25 years Negligible - Probability very small, close to zero

21 Appendix 1. Consequence categories for climate change on grazing industry in Australia Consequence category Catastrophic Description of likely consequence Inability to supply product with a considerable loss of export and domestic markets (Event is unprecedented) Inability to fully supply export and domestic markets for 5 years. Severe More than a half of the properties become unviable, with limited restructuring opportunities (Event example: economic impact of the federation drought) Inability to fully supply export and domestic markets for 2-5 years. Major Increasing rate of properties becoming unviable with significant industry restructuring Examples of the impact - Exotic disease Long-term super drought No surface water for agriculture Price of methane emissions exceeds beef industry value Global anti-meat cultural change Market collapse (e.g. global depression, world war affecting clients) - Woody weed explosion on a regional basis Increases in tree density by 30% Government intervention (legislation) Loss of topsoil Interest rate increase up to 20% Trade barriers Exchange rate goes to US $1.10 (depending on other currencies) Prolonged (and repeated) drought - Global consumption reduction Environmental pressures Animal welfare lobbying to shut down abattoirs or changing policies on farm management Interest rate increase up to 12-15% Prolonged drought - Loss of feedlot sub-sector Pesticide residues Reduced pasture growth Response to perceived or real management issues (such as land clearing, genetic modification, use of pesticides etc) Fuel prices double Local reduction in consumption Drought (Event example: 1970s beef slump) Inability to fully supply export and domestic markets for 6-24 months. Moderate More marginal properties become unviable with some industry restructuring (Event example: pesticide residue mid 1980s) - Gross margins reduced by more than consumer price index Minor More marginal properties become unviable (Event example: impacts are largely regional) - More difficult to meet terms of trade due to issues such as compliance, market fluctuations, disease, animal health legislation etc. Reduction of exceptional circumstances/drought support Locust/army worm type of outbreak Flood Small changes in terms of trade Feral animals and macropod Mining Labour shortage Pasture species/quality change (adaptation options)

22 Table 1. Example impacts and the level of impact risk associated with climate change for the Dairy Industry in Queensland. Industry element Climate Variable Forage yield A reduce forage growth 1. More days over 35oC Negative impact Likelihood: Almost certain Consequence: Major = Impact Risk =??

23 Industry Risk Matrix Exercise Impact risk = likelihood * consequence LEVEL OF NEGATIVE IMPACT Likelihood Negative consequences Minor Moderate Major Severe Catastrophic Rare Low Low Low Low Low Unlikely Low Low Medium Medium Medium Possible Low Medium Medium High High Likely Low Medium High High Extreme Almost certain Low Medium High Extreme Extreme If the impact is negative use the negative impact key. Then use Appendices 1 and 2 for examples of consequence categories and likelihood events.

24 Table 1. Example impacts and the level of impact risk associated with climate change for the Dairy Industry in Queensland. Industry element Climate Variable Forage yield A reduce forage growth 1. More days over 35oC Negative impact Likelihood: Almost certain Consequence: Major = Impact Risk = HIGH

25 Step 1d. Assign an overall impact risk for each column Industry element Forage yield Climate Variable A 1. More days over 35oC 2. More droughts reduce forage growth ve Almost certain / Major = High Impact risk reduced seasonal forage supply ve Almost certain / Severe = Extreme Impact risk 3. Increased storm intensity same total rainfall Variability in seasonal feed supply from reduced effective rainfall Higher level of nutrient leaching Increased amount of surface water available for irrigation ve (Likely / Major) = High Impact risk Overall estimate of Risk (based on rows above) High impact risk of reduced forage yields and quality and continuity of forage supply.

26 Table 2. Example adaptation responses and vulnerability to climate change for the Dairy Industry in Queensland. Feature of climate change Climate Variable 1. More days over 35oC Forage yield A Change Varieties Improve Irrigation Storage Capacity Impact risk: HIGH Adaptive capacity: LOW = Vulnerability:?? Step 2. Assign an adaptive response(s) for each impact. Step 3. Vulnerability = Impact risk * Capacity to adapt

27 Vulnerability = Impact risk * Adaptive capacity LEVEL OF VULNERABILITY TO CLIMATE CHANGE Potential impact Adaptive capacity Low Medium High Extreme High High Moderate High High High Moderate Moderate Moderate Low Low Low Low Medium Low

28 Table 2. Example adaptation responses and vulnerability to climate change for the Dairy Industry in Queensland. Industry element Climate Variable 1. More days over 35oC Forage yield and quality A Change Varieties Improve Irrigation Storage Capacity Impact risk: HIGH Adaptive capacity: LOW = High Vulnerability

29 Table 2. Example adaptation responses and vulnerability to climate change for the Dairy Industry in Queensland Feature of climate change Climate Variable 1. Higher maximum temperature Product yield Product Quality Pest and Disease Incidence A B C Change Varieties Improve Irrigation Storage Capacity Improve Irrigation Scheduling Change Varieties Improve Irrigation Storage Capacity Improve Irrigation Scheduling Adopt Improved Integrated Pest Management Systems High negative impact / Low adaptive capacity High negative impact / Low adaptive capacity High Vulnerability High negative impact / High adaptive capacity Moderate Vulnerability High Vulnerability 2. Higher minimum temperature No Adaptation Required Nil Vulnerability No Adaptation Required Nil Vulnerability Adopt Improved Integrated Pest Management Systems High negative impact / High adaptive capacity Moderate Vulnerability 3. Decreased Rainfall Improve Irrigation Storage Capacity Improve Irrigation Scheduling Improve Irrigation Storage Capacity Improve Irrigation Scheduling Adopt Improved Integrated Disease Management Systems High negative impact / Low or Medium adaptive capacity High negative impact / Low or Medium adaptive capacity Low positive impact / High adaptive capacity High Vulnerability High Vulnerability Low Vulnerability

30 Preparing risk statements Risk Statements derived from risk analysis can identify the: nature and level of risk nature of useful adaptation responses need for, and timing of the response organisations responsible for the response, and need for R & D To achieve this: identify the areas with the greatest vulnerability prepare a risk statement for one aspect

31 Example of dairy industry risk statement The high risk to the Dairy Industry of more days greater than 350C could result in reduced forage yields and forage quality. Losses of milk yield and milk quality will potentially lead to lost viability of Dairy enterprises. This risk can potentially be mitigated through funding for improved cultivar technologies, increased on-farm infrastructure in terms of water storage capacity and shade facilities. This level of risk requires an immediate response from senior levels of industry leadership, agency management, policy development and government representatives.

32 Summary Climate change is happening And it is adding to the pressures from climate variability Adaptation needs to come into decision-making Decisions with longer-term consequences need to account for both climate variability and change Be aware of both incremental and transformation adaptation Need to manage with uncertainty - scenario and risk management approaches to planning The risk matrix is a process that can simplify complexity and identify impacts, adaptive responses and vulnerability Capacity to adapt exists!

33 Thanks David Cobon Queensland Climate Change Centre of Excellence

34 Climate change variable 1. Elevated CO2 2. Increased evaporation 3. Higher minimum temperature 4. Less frost 5. Higher maximum temperature 6. More days over 350C 7. More droughts 8. Increased storm intensity - same total rainfall 9. Decrease in winter rainfall 10. Decrease in summer rainfall 11. Increased storm frequency - same total rainfall, local flooding 12. More wildfires 13. Higher Peak Wind Speeds LEVEL OF CONFIDENCE IN PROJECTIONS Very high confidence in projections High confidence in projections Medium to high confidence in projections Moderate confidence in projections

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