Climate Volatility and Change in Central Asia : Economic Impacts and Adaptation

Central Asia is projected to experience a significant climate change, combined with increased weather volatility. Agriculture is a key economic sector and a major source of livelihoods for Central Asia’s predominantly rural population, especially for the poor. Agricultural production, being sensitive to weather shocks and climate volatility, may suffer from climate change if no adaptive actions are taken. Taking these into account, the present study seeks to estimate the potential economic impacts of climate change on Central Asia’s agriculture and rural livelihoods, as well as to identify factors catalyzing or constraining adaptation to climate change. Weather shocks could potentially affect the supply of agricultural commodities and their prices. In this thesis, the effects of weather shocks on agricultural commodity prices in Central Asia are studied at the provincial scale using monthly data for the period of 2000-2010. The study analyses the idiosyncratic components of the variables using feasible generalized least squares (FGLS) panel regression in the presence of cross-sectional dependence and serial autocorrelation. The analysis indicates that negative shocks, involving lower than usual temperatures and precipitation amounts, could lead to higher wheat prices in the region. Lower availability of irrigation water may encourage irrigation-dependent countries in the region to aggressively raise wheat stocks to face expected supply shortfalls, thus leading to higher regional wheat prices. This effect could be further aggravated by negative impacts of lower irrigation water availability on wheat yields. The estimates of the aggregate impacts of climate change on Central Asian agriculture range between +1.21% to -1.43% of net crop production revenues by 2040. The absolute monetary impact is not negligible, ranging from + 180 mln USD annually in the optimistic scenario, to – 210 mln USD annually in the pessimistic scenario relative to 2010 levels, where optimistic and pessimistic scenarios are defined to correspond to B1 (lowest future emission trajectory) and A1FI (highest future emission trajectory) scenarios by IPCC (2007), respectively. As a key conclusion, agricultural producers operating in inherently stressed environments, such as in Central Asia, may have relatively more experience to dynamically adapt to erratic and changing environments. The analysis of the nationally representative household surveys using quantile regressions with and without instrumentalizing for endogeneity between consumption and production decisions within the framework of agricultural household model confirms that poorer households are more vulnerable to the impacts of weather and climate shocks with every 1% decrease in the level of their farming profits being likely to lead to 0.52% decrease in their food expenses. A similar decrease for the richest 10% of households would translate to only 0.39% decrease in food consumption. The models also show that the profit effect of potato prices seems to be quite important especially for the poorest farmers. Many farmers in Central Asia are already engaged in ex post adaptation to the changing climate; however, further Government support is needed for pro-active ex ante actions. A vital mechanism for achieving this purpose is through increasing farmers’ resilience and adaptive capacities to withstand current and future shocks, both expected and uncertain. The analysis shows that key policy actions to achieve this in the region are through: i) increasing awareness of agricultural producers about climate change impacts and adaptation technologies; and ii) improving rural financial intermediation. The key general message of the adaptation analysis in this study is that most institutional and technological options suggested as measures to adapt to climate change in the region are strongly needed for regional development even with perfect climate change mitigation.Klimaschwankungen und -veränderung in Zentralasien: Wirtschaftliche Auswirkungen und Anpassungsmöglichkeiten Zentralasien wird den Vorhersagen zufolge signifikante Klimaveränderungen gekoppelt mit erhöhten Klimaschwankungen erleben. Die Landwirtschaft ist ein wichtiger Wirtschaftszweig und eine wichtige Lebensgrundlage für die überwiegend ländliche Bevölkerung Zentralasiens, vor allem für die Armen. Die landwirtschaftliche Produktion, die anfällig für Wetterextreme und Klimaschwankungen ist, kann durch den Klimawandel beeinträchtigt werden, z.T. mit gravierenden Folgen für die Lebensgrundlage im ländlichen Raum in vielen Teilen der Region, wenn keine adaptive Maßnahmen ergriffen werden. Dies berücksichtigend versucht die vorliegende Studie, die möglichen wirtschaftlichen Auswirkungen des Klimawandels auf die Landwirtschaft und ländliche Lebensgrundlage Zentralasiens zu bewerten sowie die Faktoren, die die Anpassung an den Klimawandel katalysieren oder einschränken, zu identifizieren. Wetterextreme könnten potenziell die Versorgung mit landwirtschaftlichen Rohstoffen und deren Preise beeinträchtigen. In dieser Arbeit werden die Auswirkungen von Wetterextremen auf landwirtschaftliche Rohstoffpreise in Zentralasien auf Provinzebene mit monatlichen Daten für den Zeitraum von 2000-2010 untersucht. Die Studie verwendet eine innovative Schätzmethode, bei der die idiosynkratischen Komponenten der Variablen mit Verallgemeinerte Kleinste-Quadrate-Modelle (FGLS) Panelregression bei Querschnittsabhängigkeit und serieller Autokorrelation analysiert werden. Die Analyse zeigt, negative Extreme, die niedrigere Temperaturen und Niederschlagsmengen als üblich bedeuten, könnten günstige Bedingungen für höhere Weizenpreise in der Region hervorrufen. Eine geringere Verfügbarkeit von Bewässerungwasser kann die Länder in der Region, die vom Bewässerungswasser abhängig sind, dazu animiere, die Weizenbestände aggressiv zu erhöhen, um die zu erwartenden Engpässen abzupuffern, was zu höheren regionalen Weizenpreisen führen würde. Dieser Effekt könnte zusätzlich verschärft werden durch die negativen Auswirkungen geringerer Wasserverfügbarkeit auf die Weizenerträge. Die Schätzungen der aggregierten Auswirkungen des Klimawandels auf die zentralasiatische Landwirtschaft schwanken von +1,21% bis -1,43% des Nettoumsatzes für Getreideproduktion im Jahr 2040. Die absoluten monetären Auswirkungen sind nicht unerheblich, sie können von +180 Millionen USD jährlich im optimistischen Szenario bis hin zu -210 Millionen USD jährlich im pessimistischen Szenario gegenüber dem Niveau von 2010 variieren, entsprechend den optimistischen und pessimistischen Szenarien B1 (niedrigste zukünftige Emissionskurve) bzw. A1FI (höchste zukünftige Emissionskurve) des IPCC (2007). Als zentrales Ergebnis ist festzustellen, dass die landwirtschaftlichen Produzenten, die in derart inhärent unsicheren Umgebungen operieren, erfahrener sind, sich dynamisch an eine unregelmäßige und sich verändernde Umwelt anzupassen. Die Analyse von national repräsentative Haushaltsbefragungen unter Verwendung von Quantilregressionen mit und ohne Instrumentalisierung für Endogenität zwischen Konsum- und Produktionsentscheidungen im Rahmen des landwirtschaftlichen Haushalts-Modells bestätigt, dass ärmere Haushalte anfälliger sind für die Auswirkungen von Wetter- und Klimaextrema. Ein 1%er Rückgang des Niveaus ihrer landwirtschaftlichen Gewinne führt möglicherweise zu einem Rückgang von 0,52% der Verpflegungskosten, während ein ähnlicher Rückgang für die reichsten 10% der Haushalte nur zu einem Rückgang von 0,39% der Nahrungsaufnahme führen würde. Die Modelle zeigen auch, die Gewinnwirkung der Kartoffelpreise scheint vor allem für die ärmsten Bauern wichtig zu sein. Viele Bauern in Zentralasien sind bereits mit der ex-post-Anpassung an den Klimawandel beschäftigt; weitere Unterstützung seitens der Regierung ist jedoch für pro-aktive ex-ante-Maßnahmen. Ein wichtiger Mechanismus für die Erreichung dieses Ziels ist die Erhöhung der Widerstandsfähigkeit der Landwirte und deren Anpassungsfähigkeit an aktuelle und zukünftige, sowohl vorhersehbare als auch ungewisse Extrema. Die Analyse zeigt die folgenden wichtigsten politischen Maßnahmen auf, um dieses in der Region zu erreichen: i) das Bewusstsein der landwirtschaftlichen Produzenten hinsichtlich der Auswirkungen des Klimawandels und Anpassungtechnologien zu erhöhen; und ii) die Verbesserung der ländlichen Kredit- und Versicherungsvermittlung. Die Schlüsselbotschaft der Anpassungsanalyse dieser Studie ist, dass die meisten institutionellen und technologischen Möglichkeiten, die als Maßnahmen zur Anpassung an den Klimawandel in der Region vorgeschlagen werden, dringend erforderlich sind für regionale Entwicklung auch bei vollständiger Verringerung des Klimawandels

Land use change and economics of land degradation in the Baltic region

In this paper, we adapt a new conceptual framework for the assessment of the economics of land degradation and sustainable land management to the Baltic region. The findings show that the problem of land degradation in the countries of the region is quite substantial, manifesting itself through reductions in the provision of land ecosystem services. Using a benefit transfer approach, the total economic value of these losses due to land degradation is estimated to be about 9 billion USD annually. On the other hand, we find that every dollar invested into restoring the degraded land ecosystems may return about 3 dollars in social gains after a 6-year period following the re-establishment of the higher value biome, making actions to address land degradation in the region both environmentally valuable and economically attractive

Restoring Degraded Lands

Land degradation continues to be an enormous challenge to human societies, reducing food security, emitting greenhouse gases and aerosols, driving the loss of biodiversity, polluting water, and undermining a wide range of ecosystem services beyond food supply and water and climate regulation. Climate change will exacerbate several degradation processes. Investment in diverse restoration efforts, including sustainable agricultural and forest land management, as well as land set aside for conservation wherever possible, will generate co-benefits for climate change mitigation and adaptation and morebroadly for human and societal well-being and the economy. This review highlights the magnitude of the degradation problem and some of the key challenges for ecological restoration. There are biophysical as well as societal limits to restoration. Better integrating policies to jointly address poverty, land degradation, and greenhouse gas emissions and removals is fundamental to reducing many existing barriers and contributing to climate-resilient sustainable development

Severe climate change risks to food security and nutrition

This paper discusses severe risks to food security and nutrition that are linked to ongoing and projected climate change, particularly climate and weather extremes in global warming, drought, flooding, and precipitation. We specifically consider the impacts on populations vulnerable to food insecurity and malnutrition due to lower income, lower access to nutritious food, or social discrimination. The paper defines climate-related “severe risk” in the context of food security and nutrition, using a combination of criteria, including the magnitude and likelihood of adverse consequences, the timing of the risk and the ability to reduce the risk. Severe climate change risks to food security and nutrition are those which result, with high likelihood, in pervasive and persistent food insecurity and malnutrition for millions of people, have the potential for cascading effects beyond the food systems, and against which we have limited ability to prevent or fully respond. The paper uses internationally agreed definitions of risks to food security and nutrition to describe the magnitude of adverse consequences. Moreover, the paper assesses the conditions under which climate change-induced risks to food security and nutrition could become severe based on findings in the literature using different climate change scenarios and shared socioeconomic pathways. Finally, the paper proposes adaptation options, including institutional management and governance actions, that could be taken now to prevent or reduce the severe climate risks to future human food security and nutrition

Research guide for water-energy-food nexus analysis

The project titled “The Water-Energy-Food Nexus: Global, Basin and Local Case Studies of Resource Use Efficiency under Growing Natural Resource Scarcity“ (2015-2018), which was supported by the Federal Ministry for Economic Cooperation and Development, Germany, and was undertaken as part of the CGIAR Research Program on Water, Land and Ecosystems. The project set out to develop research methodologies and insights globally as well as for the Eastern Nile Technical Regional Organization (ENTRO) of the Nile Basin Initiative (NBI) and Egypt, Ethiopia and Sudan to support efforts for enhanced water, energy and food security and environmental sustainability. The toolkit describes both qualitative and quantitative methods that have been used in the research project. It is not meant to be an exhaustive list of information and tools related to the analysis of the water, energy and food (WEF) nexus. The overall focus of the tools has been on economic analysis of the linkages across water, energy and food--to complement other studies and method developments that focus on biophysical linkages across the WEF nexus. The toolkit is aimed, primarily, at researchers interested in the analysis of the water, energy and food nexus. However, the studies summarized here also provide insights for practitioners implementing Nexus projects