Potential Impacts of Climate Change on Great Lakes Farms and Forests

1. Potential Impacts of Climate Change on Great Lakes Farms and Forests Brent Sohngen Department of Agricultural, Environmental & Development Economics Sohngen.1@osu.edu

2. Outline of Presentation • Trends affecting US agriculture and forestry  Rising demand for both forest and farm land • Climate will affect production, land value, and where we produce crops • Alters what we can produce, when we can produce it and where. • But driving force in the foreseeable future will be other land demands. • Markets influence adaptation. Note: References provided upon request

3. Trend: Economic Growth • http://www.imf.org/external/datamapper/index.php 1980 2010

4. Future Economic Growth • Energy Information Administration, International Energy Outlook 2009 (http://www.eia.doe.gov/oiaf/ieo/pdf/world.pdf) 2.2%/yr 5.7%/yr 3.7%/yr

5. Trend: Population growth is slowing…. From Southgate, et al. (2007), Table 2.4

6. But, income per household is rising… Proportion of Income spent on Different commodities as income rises • Rising wealth • A rising middle class in Asia and Latin America. • Demands • Different types of food. • Different types of housing. • Ecosystem services • Do we still prefer homes in the country? Reimer and Hertel, 2003

7. As income rises, the demand for land shifts to environmental services. Trends in CRP Land Environmental Kuznets Curve Source: USDA - FSA Source: USDA – Forest Service, Forest Inventory and Analysis

8. Technical Change: Global Crop YieldsTweeten and Thompson (2009)

9. Policies are increasing pressure on the landscape • Energy Independence and Security Act (2007) • 36 billion gallons of ethanol, of which only 15 billion gallons from corn-based ethanol by 2022. • Similar legislation in Europe • Raises energy prices, increases demand for land to do something besides food.

10. Pressure on our land base grows… • Population and income shifts will continue to • increase demand for meat and higher value agricultural products • Increase the demand for wood (more bigger homes/construction). • Increases demands on land. • Biofuel policy will further increase demand for land • Rising incomes lead to greater demand for ecosystem/carbon services

11. Climate Change Forests and Agriculture • Agriculture and forestry are two of the most studied sectors • Already “climate adapted”. • Agriculture and food security are, arguably, two of the most important concerns. • What matters • Change in average temperature & precipitation • CO2 fertilization • Adaptation… • Change in variability (highs/lows; day/night) • Extreme events

12. Output depends on climate • Optimal output globally occurs at an average temperature of around 12 degrees C. • With climate change, output increases in colderplaces, and decreases in warmer places • Great Lakes states are slightly colder than 12 degrees C. Global Optimal Temperature 12º C Nordhaus (2006), PNAS

13. Agriculture: Global yield impacts Crop yields & climate change: Temperate Zone: Yields likely to increase with 1-3 C average temp. increase. Tropical Zone: More susceptible to temp. increases. From IPCC, WG II, 2007

14. Major Studies on US Agriculture & Climate Change • Adams et al. (1990): -10% to +10% • Mendelsohn et al., (1994): -5.7% to + 1.2 % • Adams et al. (1995): -1.5% to +0.9% • Reilly et al. (2003): -$0.1 to -$5.0 bill. • Production actually increases. Loss is caused by price declines due to greater production. Southern US more susceptible. • More recent studies suggest broader range of impacts: • Schlenker et al. (2006): -11% to -21% per acre • Deschenes and Greenstone (2007): +$1.3 bill. • Massetti and Mendelsohn (2010): +$15 bill., or +1.5%

15. US $$ Impacts/Land • Mendelsohn et al., (1994): -5.7% to + 1.2 % Change In Farm Value

16. Major Studies on US Agriculture & Climate Change • Adams et al. (1990): -10% to +10% • Mendelsohn et al., (1994): -5.7% to + 1.2 % • Adams et al. (1995): -1.5% to +0.9% • Reilly et al. (2003): -$0.1 to -$5.0 bill. • Production actually increases. Loss is caused by price declines due to greater production. Southern US more susceptible. • More recent studies suggest broader range of impacts: • Schlenker et al. (2006): -11% to -21% per acre • Deschenes and Greenstone (2007): +$1.3 bill. • Massetti and Mendelsohn (2010): +$15 bill., or +1.5%

17. Agricultural Production Impacts(Reilly et al., 2003) Hadley Climate Center Canadian Climate Center 2030 +1.4C +6% Pr 2030 +2.1C -4% Pr 2095 +3.3C +33% Pr 2095 +5.8C +17% Pr

18. Major Studies on US Agriculture & Climate Change • Adams et al. (1990): -10% to +10% • Mendelsohn et al., (1994): -5.7% to + 1.2 % • Adams et al. (1995): -1.5% to +0.9% • Reilly et al. (2003): -$0.1 to -$5.0 bill. • Production actually increases. Loss is caused by price declines due to greater production. Southern US more susceptible. • More recent studies suggest broader range of impacts: • Schlenker et al. (2005, 2006): -11% to -21% per acre • Deschenes and Greenstone (2007): +$1.3 bill. • Massetti and Mendelsohn (2010): +$15 bill., or +1.5%

19. Adaptation is critical: What we produce will change… • Doering et al. (2002) and Schlenkerand Roberts (2009) indicate that major crops (corn, soy, cotton) have maximum temperature thresholds (exposure to max temps for 1 day). • Corn and soybean yields: • 2020 – 2049: Decrease 20% to 30% • 2070 - 2090: Decrease 40% to 80% • Do not account for technical change or adaptation (e.g., shifting varieties) From Schlenker and Roberts (2009), PNAS

20. Several key points emerge from economic studies of agriculture • Adaptation is critical – all economic studies stress this. • Adapting to weather is different than adapting to climate (Massetti and Mendelsohn). • Farmers already deal with weather and have many instruments available to handle uncertainty: • Forward contracting, crop insurance, retained earnings, diversification, etc. • Adapting to climate change by shifting to new varieties, altering production practices (drainagin, irrigation, nutrient mgmt), and ultimately taking on new crops will occur slowly, and with little direction. • Markets are important for adaptation (Adams, Reilly, et al.). • Prices are a vital component of any adaptation strategy. • Markets and society will benefit from ensuring free trade in agricultural commodities.

21. Forests: Ohio and Great Lakes States • Impacts from • Temperature change • Precipitation change • Carbon fertilization • These factors alter • Rate of growth • Disturbance • Competition • Species range A2 A1B B1 A1B A2 B1 MIROC MIROC HAD HAD Maps courtesy of R. Neislon, USDA – Forest Service CSIRO CSIRO

22. Forests: Ohio and Great Lakes States Norby et al. (2006, PNAS) : Doubling CO2 leads to approximately 26% increase in NPP. • Impacts from • Temperature change • Precipitation change • Carbon fertilization • These factors alter • Rate of growth • Disturbance • Competition • Species range Duke Forest FACE site nicholas.duke.edu

23. Forests: Ohio and Great Lakes States volume • Impacts from • Temperature change • Precipitation change • Carbon fertilization • These factors alter • Rate of growth • Disturbance • Competition • Species range age

24. Forests: Ohio and Great Lakes States • Impacts from • Temperature change • Precipitation change • Carbon fertilization • These factors alter • Rate of growth • Disturbance • Competition • Species range http://forestecology.cfans.umn.edu/research.html forestnet.com

25. Forests: Ohio and Great Lakes States • Impacts from • Temperature change • Precipitation change • Carbon fertilization • These factors alter • Rate of growth • Disturbance • Competition • Species range USDA Forest Service: http://www.nrs.fs.fed.us/atlas/tree

26. State of Analysis in Forestry Adaptation of Forests and People to Climate Change. 2009. Alexander Buck, PiaKatila and RistoSeppälä. (eds.). IUFRO World Series Volume 22. Helsinki. 224 p.

27. MC1 LPJ Projected ecosystem shifts by 2030 1990 1990 2030 Hadley 2030 Hadley 2030 CGM1 2030 CGM1 Bachelet et al. (2003)

28. MC1 LPJ Projected ecosystem shifts by 2090 1990 1990 2090 Hadley 2090 Hadley 2090 CGM1 2090 CGM1 Bachelet et al. (2003)

29. Integration of Ecosystem effects: CO2 fertilization + Δ in growth + disturbance + species shifts. Hadley CGM1 Bachelet et al., (2004)

30. Ecosystem models leave people and markets out! • How will people adapt? • Salvaging losses from dieback and disturbance • Pre-emptively harvesting as growth rates change • Regenerating new species as climate changes • Altering thinning and competition management regimes • Some changes in direct response to climate change in specific locations (e.g., a disturbance occurs) • Other changes in direct response to changes in prices (e.g., changes that occur elsewhere) • The Great Lakes States are not “an island”!

31. Effects of climate change on timber output. Effect of climate change on timber output Average across climate scenarios Regeneration => Stocks not affected by dieback Dieback => Additional 1.6 million ha’s of dieback/yr (+38%) in NA Regeneration Scenarios Dieback Scenarios Sohngen and Sedjo (2005)

32. Role of international markets • Output elsewhere rises more than US • Prices fall (10-15%) • Despite higher harvests in some regions/scenarios, negative impacts on US producers/landowners due to lower prices • $1.4-$2.1 billion annual effect nationally. Regeneration Dieback Sohngen and Sedjo (2005)

33. Timber: US Impacts on producers Forest Fires/Dieback Moderate/Regeneration + 2.5 C + 5 C Sohngen and Mendelsohn (2000)

34. Projected land use with climate change From Haim et al., 2010

35. Climate Changes Projections for Ohio/Great Lakes Quite a bit of uncertainty due to confounding influences CO2 fert is a plus, but extreme hot weather is negative. Growth of trees increases, but potential dieback increases

36. How do landowners use climate change information? • Farmers are already adapting • increasing number of varieties, e.g., days to maturity • Infrastructure (drying; drainage) • Uncertainty is still very large with climate projections • Suggests that current responses should be modest. • Will see increasing changes by 2030; potentially dramatic changes by 2090. From IPCC, 2007, WG I SPM

37. Forestland Owner Concerns • How to manage the trees you have. • How to adapt to changing disturbance patterns. • Not enough evidence to start anticipating disturbance yet. • How to plan for future forest when regenerating • When should you account for climate change? • How to manage market signals for timber outputs and land value. • 10-15% price effect in the next 30 years caused by climate change is small compared to recent demand shock….

38. Conclusions • Land gets more valuable • Underlying trends in income, population and policy will have stronger effects on farms and forests in the next 10-50 years than climate. • Agriculture: Adaptation likely modest in next 25 years; more substantial beyond that. • Gains in northern GL states; holding steady to losses in lower GL states by 2050. • No major changes now; continue trying new hybrids/varieties as they come available. • Forests: Ecological shifts modest in next 25 years; larger beyond that, particularly in northern GL states. • Output and land value could benefit in near term. • Losses may accrue due to global impacts.