2025, Volume 22, Paper 1
ISSN: 1449-7875
Farm Profit Impacts of Consecutive Drought Years Under Climate Scenarios in Southwestern Australia
Kharel, S. – Department of Primary Industries and Regional Development, Western Australia
Foster, K. – Department of Primary Industries and Regional Development, Western Australia; Institute of Agriculture, University of Western Australia
Guthrie, M. – Department of Primary Industries and Regional Development, Western Australia
Kingwell, R. – Department of Primary Industries and Regional Development, Western Australia; School of Agriculture and Environment, University of Western Australia; corresponding author
Abstract
Climate projections for southern Australia indicate an increased likelihood of years of consecutive droughts. How resilient are farm businesses and their farming systems to recover from episodic drought? This study assesses the farm economic and financial impacts of consecutive droughts in southwest Australia. Bioeconomic simulation modelling of farm businesses with different farming systems at three locations is used to examine the long-term financial consequences of consecutive droughts. Various key factors affecting those consequences are examined. Farm location, farming system and starting equity are found to be the main determinants of how quickly a farm business can financially recover from the impact of consecutive droughts. Initial low equity greatly reduces the likelihood or speed of recovery from consecutive droughts, especially in low rainfall locations where crop dominant farming systems are commonplace. Projected future climate is shown to affect farms differently, based on the farm’s location and farming system. Farms in high rainfall locations are projected to benefit from future climate change and are more resilient and quicker to recover from consecutive droughts. Changes in sheep or grain prices, during and immediately after consecutive droughts, are shown to only marginally affect a farm’s long-term financial performance whereas rates of gain in crop improvement more strongly support the farm’s financial recovery.
Key words: drought, farm business, modelling, future climate
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