Sector level agricultural development following different adaptations to climate change

Abstract

Future crop yields in northern Europe are subject to many factors and uncertainties, according to recent agro-ecological studies. Based on our farm level analysis, we concluded that prices of agricultural products are the primary drivers in the adaptation to climate change. They, as well as the policy conditions, affect the level of fertilization and the use of other inputs, land use and the intensity and the volume of agricultural production. We outlined 5 main scenarios of agricultural adaptation in Finland, and used an agricultural sector model to assess the impacts of the 5 scenarios on total production and land use in the whole country and in its four main regions. In the scenarios with unchanged product prices in the real terms, we find that a small increase or decrease in crop yields is possible. Significantly higher yields would require also 20-30% higher prices of crop products. Our sector modeling results suggest that avoiding decreases in crop yields is important for agricultural income in the long-term, even if livestock production in also maintained by national subsidies. Decreasing yields will result in increasing nutrient surplus and most likely in increased nutrient leaching, while increasing crop yields, even slightly, would significantly decrease nutrient surplus and increase farm income. Significant increases in crop yields and prices, however, are required before production clearly increases in Finland. Interestingly, cereals production would increase relatively more than livestock production, in the case of high future prices. This is explained by the abundant land resources, as well as the high opportunity cost of labor and policy systems maintaining current livestock production.