Agriculture, Water and Climate Change: Four Questions for the Next Transformation

Griffith review submission 2020

AUSTRALIA’S AGRICULTURAL SYSTEMS need to transform. This is not a suggestion: climate change is increasing the variability of rainfall and water supplies, one of the few consistent inputs required to grow food. We know that, in the short term, forecasts are for the dry areas in Australia to get drier and wet areas to get wetter. Drier means deeper droughts and more evaporation from water storages while wet means more rainfall, offset by increasing rainfall intensity that carves away topsoil. The long term is hugely uncertain.

This continent’s famously variable climate means good famers are natural risk managers and adaptive planners. They take the natural variability of water, along with a range of other factors including temperature and soil composition, and use it to produce a consistent and profitable supply of food. However, they face a new and growing challenge in climate change where their capacity to manage water variability may be outstripped by the landscape changes and hobbled by a lack of trust in how water is managed in this country. A number of emerging factors compound this issue even further. The average farmer is 17 years older than the average Australian worker. Rural debt is at record levels, suggesting farmers are increasingly reliant on loans to keep their businesses afloat and have limited ability to fund large scale investment. This has a cascading effect on farmers’ mental health, as fears of bank foreclosure and loss of livelihood grows. Farmers can also discount their impact on the environment, focusing through plans that increase production at the expense of surrounding ecosystems and biodiversity.

Of course, this transformation will need to be funded – and it will require private sector investment. Even large increases in government funding – which is crucial – will not be enough support the adaptation needed in the Australian agricultural sector. A potential source of funding for agricultural transformation is the growing area of sustainable and responsible finance. In 2019, the Responsible Investment Association Australasia reported that 44 per cent of the $2.24 trillion managed by investment professionals in Australia was being managed with responsible investment principles.

From my experience, there are four key questions that need to be addressed if our farming systems are to take a major step towards resilience in the face of climate change:

• How do we radically increase on-farm water efficiency through technology, adapting our farms to do more with less?
• How can we rebuild trust in our water management systems?
• What is the role of climate-independent farming that uses desalination and urban recycled water sources?
• And how do we reduce the mental health impacts on farmers who have to transform, and potentially relocate, their farms in the face of climate change?

CURRENT FARMING PRACTICES are water intensive, accounting for 60 per cent of Australia’s total water consumption. Fruit and nut trees in Australia currently require 9 million litres per hectare while vegetables require 3.4 million litres. Cereals and rice require less than 2 million litres. To reduce dependency on an increasingly variable supply, the future of agriculture will involve a radical reduction in water use – but with the same or increased productivity.

The Israeli agricultural hub is a world leading area for agricultural technology. In the 1950s, researchers saved up to 70 per cent of water using drip irrigation compared to traditional furrow irrigation where water was run down trenches along the crops. Drip irrigation systems not only increased water efficiency but subsequent studies by researchers in the Netherlands found ways to get yields of over 550 percent above traditional irrigation.

In Australia, a 2017 Parliamentary Committee Inquiry on water use efficiency in the Australian agriculture sector explored the impact of government funding for on-farm water efficiency. The Inquiry found that $559 million of Australian Government funding for 1,500 individual on-farm irrigation efficiency projects was expected to increase efficiency by an average of 18 per cent for these farms. This program funded projects including upgrading furrow and sprinkler systems on farms to drip irrigation. The efficiency gains were primarily through deploying and renewing irrigation technology that is over 50 years old.

Now the search is on for the next drip irrigation-sized reduction in water use and a good target is the high water-use orchards. The growth in demand for products such as almond milk means that more high water use orchards will be grown. A University of Oxford study found that almond milk, while requiring half of the water of dairy milk, needed 74 litres of water to produce a single 200ml glass.

An Israeli company, Saturas, has developed a sensor implanted into trees, providing accurate measurement of tree health, similar to devices for vital signs measurement for humans. By deploying one or two of these devices per hectare, farmers monitor and optimise irrigation to avoid over-watering and maximise plant health. Another potential major water use reduction is the use of drones with remote sensing and thermal imaging capabilities to identify leaks within irrigation systems across significant areas. A Californian study had a 93% success rate of identifying leaks in the Lower Rio Grande Valley in Texas. This is one of many products being developed to increase monitoring and optimise on-farm water use for large scale agriculture.

A new water efficiency increase target with new technology should be similar to the impact of drip irrigation. Success is when crops are produced with water requirements that are at least 50 per cent less. A potential area for investigation is learnings from the water efficiency of hydroponic, climate controlled systems. A study on water use by researchers at the Arizona State University found that hydroponic water use for growing lettuce was 92% less than conventional agriculture methods. Major reductions in water requirements reduce the impact of water supply variability on farm production, improving the consistency of financial returns to farmers and potential investors.

UNFORTUNATELY, THE KINDS of transformative practices needed can be made more expensive due to the poor governance and lack of enforcement in how water is managed in Australia’s major water supply schemes. The trust of all stakeholders in our water management systems has been damaged, and a lack of trust stymies and undoes the good work done in transforming agricultural systems.

Water is managed across Australia through systems of dams and weirs. These systems reduce the variability of water supply, smoothing out the seasonal differences in rainfall and enabling water to be available for key irrigation periods. As the driest inhabited continent and one that experiences high rainfall volatility, Australia has some of the largest water storage systems of any country in the world. The creation and operation of these water systems has impacted the ecology and biodiversity of Australia’s landscapes. Recent fish kills in the Menindee Lakes in the Darling River have drawn attention to the impacts of the altered flows of Australia’s waterways by water storages. Public trust has eroded because there have been multiple efforts to restore water flows for the environment across many water supply systems to support river health.

In its five-year review of the Murray Darling Basin Plan released in 2019, the Productivity Commission noted that about 20 per cent of the water that was available for consumptive uses such as irrigation decade ago was now dedicated to the environment. The development of new water storages now also have requirements to integrate ecological and biodiversity considerations with national legislation in the Environmental Protection and Biodiversity Conservation (EPBC) Act. The EPBC Act requires a report on all actions, such as building new water storages, that may impact matters of national environmental significance to be provided to the department and its Minister for assessment and approval.

But the analysis from the Australian Academy of Science (AAS) and the Auditor-General suggests that our progress towards balancing the environmental and agricultural needs in our landscape has been limited. In 2019, an investigation of the Menindee Lake fish kills by the AAS found that environmental flows in the Murray Darling Basin during dry periods, when the environment needs it the most, have decreased since 2012. Lower environmental flows during dry periods increases the likelihood of fish kills. The investigation linked the fish kills due to drought and excess upstream diversion of water for irrigation resulting from Basin governance structures not acting as designed. The Auditor-General’s recent environmental performance report, released in June 2020, concluded that the Department of Agriculture, Water and the Environment’s administration of referrals, assessments and approvals of controlled actions under the EPBC Act is not effective at meeting the stated goals of the Act.

The 2019 Productivity Commission review also found that confidence in the management of the Murray Darling Basin had been damaged by concerns that areas of the basin have substantial deficiencies in enforcement of their water take laws. An unwillingness to demonstrate that water is being sent to its rightful owners and ongoing, public allegations of fraud by groups within the Basin have compounded these concerns and left farmers sceptical of the Murray Darling Basin Plan.

Trust on water issues is eroded by the failure to enforce legislation and generate clear environmental outcomes. This erosion impacts how all stakeholders in the Basin behave. A study by the UK Department of International Development concluded that perceived unfairness or corruption distorts future operating patterns, prompting businesses to either avoid dealing with controversial providers and adopt inefficient production models, or to adopt corrupt and/or rent-seeking behaviours as opposed to productive industry.

Poor governance and low accountability in the water sector reduces the confidence of stakeholders including farmers in the system at a time when climate change will increase competition for water. In areas of poor governance, potential investors demand higher rates of return and higher interest rates to compensate for increased governance risks. This makes much-needed finance more expensive. In addition, sustainable investors are likely to avoid investments with poor governance and poor environmental outcomes.

IN LIGHT OF these issues, climate-independent farming – which relies on desalination and urban recycled water – is an increasingly viable alternative.

Water variability results in price spikes for food. In early 2020, ongoing drought in Australia drove up the prices of cauliflower, broccoli, green leafy vegetables including rocket and spinach, as well as potatoes and pumpkins. A spokesperson for peak body of Australian vegetable growers, AusVeg, noted that prices of $11.50 for a kilogram of broccoli and $8 a bunch for fresh celery were a result of drought and bushfires alongside panicked shoppers during the early stages of COVID-19. Relocating high value crops with high water requirements such as vegetables to areas with access to water through desalination and recycled systems. Tapping climate independent water sources is currently more expensive than traditional farming, but the combined factors of increasing variability in water from traditional sources, falling cost of desalination and recycled water plants, and falling cost of clean energy to power these facilities makes this option more attractive over time.

SunDrop Farms in the hot desert climate of Port Augusta in South Australia uses solar power and hydroponic greenhouses with desalination to create fresh water for its indoor tomato farms. It uses a state-of-the-art solar tower to produce energy to power the plant growing systems and to heat and cool the greenhouses as required. The tower is 115m high and has 23,000 mirrors pointed at it. The farm now produces 15,000 tonnes of truss tomatoes a year – some $105m worth – and employs around 220 people, supplying 15 per cent of Australia’s tomatoes. Sundrop Farms now has facilities in Odemira, Portugal and Tennessee in the US.

Recycled water schemes including Brisbane’s Western Corridor Recycled Water Scheme and multiple wastewater treatment plants in Melbourne have the potential to support irrigated farming in areas surrounding our major urban centres. In addition, locating farms to use desalination and recycled water sources may also generate other benefits, including reducing carbon emissions associated with food transportation due to farms being closer to Australia’s population and export facilities located on the coasts.

Investors are already financing these types of agricultural production systems. SunDrop Farms’ facility cost $200 million to build, with global private equity firm Kohlberg, Kravis and Roberts investing $100 million. Growing private investment in climate independent agricultural systems will be a strong indicator that this transformation is occurring. A stronger signal will be when we see lower price spikes for vegetables during droughts indicating that our agricultural systems are becoming less reliant on variable rain-fed supplies of water.   

THE WORK THAT farmers do is demanding, even in the absence of considerations such as these. Water insecurity has been linked to mental health issues in rural populations, particularly farm owners and labourers. A 2018 study published in the Medical Journal of Australia examined data in the Australian Rural Mental Health Study. It found farmers in New South Wales experience significant stress about the effects of drought on themselves, their families, and their communities. Farmers who are younger, live and work on a farm, experience financial hardship, or are isolated are at particular risk of drought-related stress. A 2019 study published in the International Journal of Environmental Research and Public Health found that Australia stands out in terms of the pressure of climate variability on farmer mental health. Climate stressors were mentioned in 40 per cent of Australian studies.

Stress can result in short term thinking and reduce people’s cognitive space for process problem-solving. A 2018 study published by researchers at the University of Albany concluded that the presence of a stressor may generally result in failure to attend to the full range of possible consequences of a decision. Under climate change, farmers have to imagine and then implement a transformation in their farming methods to maintain production but with decreased decision-making abilities brought on by the impacts that they are trying to address.

Resources are available for mental health in rural and farming communities. Australian programs such as Rural Minds and Are You Bogged Mate encourage discussions about mental health in rural communities, enabling participants to improve attitudes towards mental ill-health and help-seeking and remove barriers to help-seeking. Online platforms such as FarmTable provide information and discussion boards on mental health and wellbeing. A program in Canada called Healthy Minds, Healthy Farms found that undertaking business plans enable farmers to better understand their financial position, improving long term financial resilience with positive impacts for mental health. The Canadian program surveyed 1,735 farmers and 88 per cent of respondents claimed that business plans contributed to peace of mind. In Australian, the National Farmers Federation has a target of 90 per cent of family-owned farms having a business plan. The costs of climate change adaptation should be explicitly included in these business plans as a step to building greater resilience in the face of the mental impacts of climate change.

The state of mental health for farmers across Australia will be a strong indicator for our ability to transform our agricultural system in the face of climate change. Higher levels of mental health issues within rural communities will indicate that we are not only failing these people on a personal level but that we failing to transform the systems that we depend on for food.

THE FOUR QUESTIONS I have posed are interlinked. Improving mental health supports farmers to implement solutions for water efficiency and climate independence. Improving trust in the governance of water systems ensures that the work done by farmers to adapt to climate change is not undermined by other groups prospering through fraud. Improving water efficiency, governance and climate independent sources aligns agriculture with the rising pool of sustainable investment.

In adapting to a future climatic state, there has been the criticism that we may over-adapt, meaning we spend more money addressing the problem than what the cost of the problem should be. There is little risk of over-adapting in these four areas. Ongoing improvements in water efficiency, climate independence, mental health and trust in governance strengthen our food production systems even in the event of less climate change than forecast. More importantly, we begin to build systems for worse than predicted climate change. Investment in these areas puts us two steps ahead on climate adaptation in agriculture.

An example of two steps ahead adaptation is the Australian wine industry’s Climate Atlas. The Atlas, developed by Wine Australia and the University of Tasmania, charts an 80-year course through climate change for the industry. The information includes temperature, rainfall, aridity and frost for each of the country’s 71 wine regions at a resolution that is relevant to growers on the ground, giving them a chance to choose their future. Grape growers and winemakers compare the future of their regions with others that are already experiencing those temperatures and rainfall conditions so that grows can begin to adjust their wine varieties. The Atlas supports natural risk management and long term planning capabilities of wine growers, enabling them to make informed decisions and explores technology and investment options.

Climate change affects how we produce food in this country. In the absence of investment, support to transform and sound governance, we ask each farmer to shoulder the burden of climate adaptation, alone and unassisted, to their own and our detriment. Combined effort in these four areas, with the potential to access responsible and sustainable investment, could make all the difference, not just to the capacity of farmers, but to the sense that we, as a society, can adapt to the future that is rapidly approaching.