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Department of Agriculture

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  • Research topics
    • About my region: regional profiles
    • Agricultural outlook
      • Agricultural overview
      • Australian crop report
        • National overview
        • New South Wales
        • Queensland
        • South Australia
        • Victoria
        • Western Australia
      • Beef & veal
      • Coarse grains
      • Dairy
      • Economic overview
      • Horticulture
      • Natural fibres
      • Oilseeds
      • Seasonal conditions
      • Sheep meat
      • Sugar
      • Wheat
      • Wine and wine grapes
      • Australian rice markets in 2020
      • Water market outlook
      • Commodities and trade data
      • Historical agricultural forecast database
      • Definitions
      • Previous reports
    • Biosecurity
      • Biosecurity economics
        • A benefit-cost framework for responding to Varroa
        • Benefits of increased access to minor use chemicals
        • Biosecurity control strategies for red imported fire ants
        • Biosecurity response options for black-striped mussel
        • Consequences of a foot-and-mouth disease outbreak
        • Economic consequences of a scrapie outbreak in Australia
        • Economic impacts of Xylella fastidiosa on the Australian wine grape and wine-making industries
        • Estimating the value of Australian biosecurity arrangements for equine influenza since the 2007 outbreak
        • Farm gate value of biosecurity
        • Potential impact of the wheat steam rust strain Ug99 in Australia
        • The impacts of Xylella fastidiosa on Australian horticulture and the environment
      • Biosecurity sciences
        • Treated ballast water and its impact on port water quality
      • Biosecurity engagement
    • Climate and drought
      • Agricultural Data Integration Project
      • Farm performance and climate
      • Measuring drought risk
    • Fisheries
      • Fishery status reports 2021
      • Fisheries and aquaculture statistics 2020
        • Australian fisheries and aquaculture production
        • Australia’s trade in fisheries and aquaculture products
          • Market access improvements: A case study of stone fruit exports to China
        • Seafood consumption in Australia
        • Employment in Australian fisheries and aquaculture 2019–20
        • About this report
        • Other useful information
        • Economic concepts in Australian fisheries and aquaculture statistics
      • Fisheries data
      • Fisheries economics
        • Australian fisheries and aquaculture outlook
        • Australian fisheries economic indicators
      • Fisheries research
        • Allocating fish stocks between commercial and recreational fishers: examples from Australia and overseas
        • Shark assessment report 2018
    • Food demand in Australia
      • Trends and issues 2018
      • Trends and food security issues 2017
    • Forests
      • Forest economics
        • Australian forest and wood products statistics
          • Socio-economic indicators—trends to 2018
        • Forest economic research
          • A framework for developing medium term projections of traded wood products
          • Economic potential for new plantation establishment in Australia
          • Future opportunities for using forest and sawmill residues in Australia
          • Illegal logging regulation: analysis of regulated importers by business size
          • Productivity and efficiency of the Australian sawmilling industry
          • Responsiveness of demand for structural pine to changes in timber and steel prices
          • Short-term forecasts of selected wood product sales volume: Method and assumptions
          • Upscaling the Australian softwood sawmill industry
        • Plantation and log supply
        • National wood processing survey
      • Forest sciences
      • Forest data
      • Forests overview
    • Invasive species
      • Distribution and impacts of established pest animals and weeds
      • Exotic invasive species with environmental impacts
      • Prioritising targets for biological control of weeds
      • The National Priority List of Exotic Environmental Pests, Weeds and Diseases dataset
      • The state of weeds data collection in Australia
      • Wild dog research
    • Labour
      • Australian agricultural workforce: Stocktake of data sources
      • Previous research
      • Trends in the Australian Agricultural Workforce
    • Land Use
      • Catchment scale land use of Australia - Commodities - Update December 2020
      • Catchment scale land use profiles
    • Agricultural productivity
      • Agricultural productivity estimates
      • International comparisons
      • Measuring productivity
      • Pathways to sustainable and productive agriculture
      • Productivity data
      • Productivity drivers
        • Seasonal workers and working holiday makers comparison report
      • Productivity introduction
      • Productivity publications
      • Related research
        • Labour force survey
        • Rural research, development and extension investment in Australia
    • Social sciences
      • Australian marine pest network analysis
      • Biosecurity research
      • Climate research
      • Community engagement
      • Community involvement in plant biosecurity
      • Human dimensions research
      • Making general surveillance work
        • General surveillance case study overviews
        • Guidelines for general surveillance programs
        • Literature review: Understanding general surveillance as a system
        • Research report: Making general surveillance programs work
        • Stocktake of general surveillance initiatives
      • Natural resource management
      • Pest animals and weed management survey
      • Recreational boat operators’ self-management of biofouling in Australia
      • Social aspects of weed management
      • Social impact assessment
    • Farm surveys and analysis
      • Farm performance
      • Farm survey data
      • Disaggregating farm performance statistics by size
      • Previous research
    • Trade
      • Australian wine in China: Impact of China’s anti-dumping duties
      • Case study of Australian citrus exports
      • Case study of cattle exports to ASEAN countries
      • Agricultural export price and volume indicators
      • Analysis of government support for Australian agricultural producers
      • Australia's biosecurity market access and agricultural exports
      • Impacts of COVID-19 on Australian agriculture, forestry and fisheries trade
      • Non tariff measures affecting Australian agriculture
      • Overview of recent ABARES China research
      • Research on agriculture, trade and COVID-19
      • South America: an emerging competitor for Australia's beef industry
      • South American wine industry
      • The future of Chinese agricultural policy
      • Understanding how China's tariff on Australian barley exports will affect the agricultural sector
    • Water
      • A model of water trade and irrigation activity in the southern Murray-Darling Basin
      • Future scenarios for the southern Murray-Darling Basin: Report to the Independent Assessment of Social and Economic Conditions in the Basin
      • Measuring water market prices
      • Murray-Darling Basin water markets: trends and drivers 2002-03 to 2018-19
      • Murray-Darling-Basin water market dataset
      • Trends in water entitlement holdings and trade: Analysis of ABARES survey data
      • Water Market Outlook – August 2021
    • Agricultural forecasting
      • Changes to reporting of marketing year data
      • Farm share and price spread
      • Farmers' terms of trade: Update to farm costs and prices paid
      • Forecasting national grain stocks in times of drought
      • Seasonal climate scenarios for medium-term forecasts
      • Summary of ABARES agricultural forecasting
      • The future of public sector forecasting in Australian agriculture
    • Working papers
      • Discount rates and risk in economic analysis
      • A micro-simulation model of irrigation farms in the southern Murray-Darling Basin
      • A model of spatial and inter-temporal water trade in the southern Murray-Darling Basin
      • Defining drought from the perspective of Australian farmers
      • Introducing ABARES farmpredict
      • Non-tariff measures: A methodology
      • Simulating the effects of climate change on the profitability of Australian farms

Working papers

ABARES publishes working papers to provide its research teams with the opportunity for external peer review of ongoing research projects.

These papers are technical in nature and written in the style of a journal paper. Some of these working papers may be submitted to and accepted by a journal, or they may continue development as part of a research report intended for formal publication as an ABARES product.

Discount rates and risk in the economic analysis of agricultural projects

There is considerable debate around discount rates and the treatment of risk in economic analysis. Since the 1980s, most government economic appraisal guidelines in Australia have adopted a consistent approach set out in government economic appraisal guidelines. However, support for this position has eroded over time.

Critics have argued that the discount rate should be updated to reflect changing economic conditions and suggested, more fundamentally, that the theoretical basis of the standard approach is flawed. If these criticisms hold, we are likely to be underestimating the merits of long-term projects versus short term projects and the merits of projects that reduce risk versus projects that increase risk, with implications for the quality of investment decisions. This report explores both sides of the debate to provide rigorous and practical guidance on how economists should approach discount rates and the treatment of risk in their analysis of agricultural projects.

Published 1 April 2022

Non-tariff measures: A methodology for the quantification of bilateral trade effects of policy measures at a product level

As tariffs in Australia's major trading partners have fallen, trade negotiators are increasingly focussed on the non-tariff elements of trade agreements. A negotiator is faced with the policy challenge of determining what non-tariff measures (NTMs) and products to focus on in bilateral and multilateral negotiations. This means that qualitative and quantitative advice on the trade effects of different measures can inform one aspect of a negotiator’s multifaceted decision-making process to prioritise and allocate scarce negotiating resources. This paper outlines a defensible application of theory that leads to a ‘proof of concept’ quantification methodology for product-level bilateral trade effects of NTMs.

Published 23 February 2022

Simulating the effects of climate change on the profitability of Australian farms

Recent shifts in the Australian climate including both higher temperatures and lower winter rainfall, have had significant effects on the agriculture sector. Despite these recent trends, there remains uncertainty over the future climate and its potential impacts on Australian farm businesses. In this study, a statistical model of Australian cropping and livestock farms is applied to simulate the potential effects of climate change on farm profits.

This farm model is combined with a range of downscaled projections for temperature and rainfall by 2050. The results provide an indication of adaptation pressure: showing which regions, sectors and farm types may be under greater pressure to adapt or adjust to climate change. The future climate scenarios produce a wide range of outcomes, with simulated changes in average farm profits (without adaptation) ranging from -2% to -32% under an ‘intermediate’ global emissions scenario (RCP4.5) and -11% to -50% under a ‘high’ global emissions scenario (RCP8.5), relative to the reference period climate of 1950 to 2000.

Published 29 July 2021.

A model of spatial and inter-temporal water trade in the southern Murray-Darling Basin

This paper presents an economic model of water markets and irrigated agriculture within the Australian southern Murray-Darling Basin (sMDB). A unique data set, detailing irrigation activity, water supply and prices over the period 2000-01 to 2018-19, is used to estimate a set of water demand functions by catchment region and irrigation activity. The resulting model can realistically simulate the market prices of water, carryover volumes and trade flows across the sMDB along with irrigation water use and area planted by region and activity.

The model is applied to simulate distributions for water prices in the sMDB, and to estimate the economic benefits of interregional water trading and carryover. Water markets are estimated to generate benefits to water users in the sMDB of $117m per year on average (around 12 per cent of the market value of water rights in the region). The benefits of water markets are reduced by around half in the absence of carryover.

Defining drought from the perspective of Australian farmers

The Defining drought from the perspective of Australian farmers working paper presents a new drought indicator as  an alternative to traditional rainfall measures.

The new indicator is found to more accurately reflect the effects of drought on farm profits than simple rainfall measures, accounting for the unique circumstances of each farm and the effects of movements in domestic commodity prices (i.e. high grain and hay prices).

The Defining drought risk report also presents data on farmer self-assessments of drought. These data show differences in farmer perception of drought once variation in climate conditions has been controlled for. This includes a tendency for farmers in New South Wales and Queensland to be more likely to self-assess as ‘in-drought’ than farmers in Western Australia. There is also a trend for current farmers to be less likely to assess as in-drought than farmers in the past.

Farmpredict: a micro-simulation model of Australian broadacre farms

ABARES has developed a new model, farmpredict which can simulate the effects of price and climate variability on the production and profitability of Australian broadacre farms. farmpredict simulates the production of outputs, the use of inputs and changes in farm stocks at a farm level, given information on farm fixed inputs, input and output prices and prevailing climate conditions.

A micro-simulation model of irrigation farms in the southern Murray-Darling Basin

This paper presents a new farm level microsimulation model of irrigation activity within the southern Murray-Darling Basin (sMDB), developed by ABARES on behalf of the Department of Agriculture and Water Resources.

ABARES working papers are available for your use under a Creative Commons Attribution 4.0 International Licence except content supplied by third parties, logos and the Commonwealth Coat of Arms.

Inquiries about the licence and any use of this document should be emailed to Copyright.

Use of ABARES material under a Creative Commons Attribution 4.0 International Licence requires you to attribute the work (but not in any way that suggests that ABARES endorses you or your use of the work).

ABARES material used 'as supplied'

Provided you have not modified or transformed ABARES material in any way including, for example, by changing the ABARES text; calculating percentage changes; graphing or charting data; or deriving new statistics from published ABARES statistics — then ABARES  prefers the following attribution:

Source: Australian Bureau of Agricultural and Resource Economics and Sciences

Derivative material

If you have modified or transformed ABARES material, or derived new material from those of ABARES in any way, then ABARES prefers the following attribution:

Based on Australian Bureau of Agricultural and Resource Economics and Sciences data

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Last updated: 01 April 2022

© Department of Agriculture, Water and the Environment

We acknowledge the Traditional Owners of country throughout Australia and recognise their continuing connection to land, waters and culture. We pay our respects to their Elders past, present and emerging.