**4.3. CASE STUDY 3: Climate risk management through structural adjustment and regional relocation: A case of rice industry in Australia (S. Mushtaq, G. Cockfield, N. White, and G. Jakeman)**

Climate change poses significant challenges to the Australian agricultural sector due to likely increased climate variability and increased frequency of extreme events. Climate change projections suggest that the southern part of Australia will generally become drier, while there is a likelihood of increased rainfall and the frequency and intensity of extreme

events in parts of the north58. The possibility of climate change leading to less rainfall in southern mainland Australia, and as a result on-going water policy reforms, has triggered robust CRM strategies by agriculture sector, particularly in the rice industry. The success of any CRM strategy depends on risk management systems that reflect a more detailed understanding of the complexity inherent within human-environment interactions with more reliable future climate information and associated risks. This case study evaluates climate risks strategies employed by the rice industry in Australia.

Improving Climate Risk Management at Local Level –

Techniques, Case Studies, Good Practices and Guidelines for World Meteorological Organization Members 513

dryland wheat. Some farmers have adjusted their farming operation by shifting from rice to wheat along with a larger area of dryland wheat. The reduction in rice and the increase in wheat area will have an industry-wide impact, e.g. rice mills and storage depots were closed

**Figure 10.** Area operated per farm, p=0.001, (left); rice area, p=0.003, and total irrigated area, p=0.01, (right) as a function of water availability and in Riverina, NSW, Australia; Source: ABARE Farm Survey.

**Figure 11.** Wheat, p<0.001, and rice, p=0.01, production by area per farm as a function of water

**Water trading**: Water movement to more efficient and higher value commodities results in a consolidation of farms without showing evidence of a corporate takeover of the industry60 showed that water markets facilitate the process of farm adjustment and structural change within the irrigation industry. To maintain a liveable income during drought periods some farmers adjust their operations by temporarily trading water to other growers to take advantage of higher water prices. Fig. 12 shows the relationship of water trading to rice area in the Coleambally Irrigation Area (CIA), Riverina (NSW). However, over the last 5 years the CIA is trading-out water to satisfy the demand of high value crops such as rice. In some instances rice farmers have had to purchase temporary groundwater in order to satisfy

allocation in Riverina from 1992-2009, NSW, Australia; Source: ABARE Farm Survey.

forward contracts61.

as a result of the lower level of rice supply during 2007-08.
