*4.3.3 Socio-economic effect of extreme events on agriculture*

Results from studies on the economic impacts of climate change on prairie agriculture are highly variable from region to region and from study to study. Some studies suggest that overall economic consequences will be negative and small, whereas others indicate positive and large impacts.

Socio-economic impacts of climate change-induced changes have been estimated to be positive. A Manitoba study [35] estimated that changes in crop revenues under current economic/technological conditions will range from a 7% loss in Alberta under one scenario to an 8% increase in Saskatchewan under a slightly different scenario. Manitoba, the least water-deficient province, has been projected to benefit from warming as producers shift to higher value crops, resulting in an increased gross margin of more than 50%. Many studies have predicted increased land values in the Prairie Region under climate change. Similarly, for Saskatchewan, a study [36] reported that climate change is beneficial for Canadian Prairie agriculture except for some southeast regions of Alberta. Comparing the results from direct impacts of climate and price changes on land value with the results from indirect impacts through area response estimation reveals that direct impacts would increase land values by 31%. Ayouqi and Vercammen [37] have suggested similar results, who applied three different climate change scenarios. They reported that except for the north part of Saskatchewan and the west part of Alberta in the medium climate change scenario, all other cases show increase in the farmland value. In fact, the farmlands of Canadian Prairies were estimated to gain a value between \$1.14 and \$4.1 billion annually (based on the estimation model and scenario).

Extreme events can have devastating impacts on crop yields and through these on the rest of the regional and national economy. The Prairie Region (in fact other parts of Canada as well) experienced a major back-to-back drought during 2001 and 2002. Estimated impacts of these droughts [34] indicate that crop yields were as little as half of average yields during normal or more suitable growing conditions. Repercussions of these droughts were severe and far-reaching, including: (1) Agricultural production levels, through crop production losses, were devastating for a wide variety of crops across the Prairie Region, particularly in 2001. Total value of production dropped an estimated \$3 billion for the 2001 and 2002 drought years, with the largest loss in 2002 at more than \$2.2 billion. (2) The Gross Domestic Product fell some \$4.5 billion for 2001 and 2002, again with the larger loss in 2002 at more than \$3.1 billion. (3) Employment losses exceeded 27,883 jobs, including nearly 17,803 jobs in 2002. (4) Net farm income was negative or zero for several provinces for the first time in 25 years. (5) Livestock production was especially difficult due to the widespread scarcity of feed and water. Many producers culled their herd after the first year of the drought. (6) Water supplies that were previously reliable were negatively affected, and several failed to meet the requirements. (7) Multisector effects were associated with the 2001–2002 drought, unlike many previous droughts that affected single to relatively few sectors. Impacts were felt in areas as wide-ranging as agricultural production and processing, water supplies, recreation, tourism, health, hydroelectric production, transportation, and forestry. (8) Long-lasting impacts included soil and other damage by wind erosion, deterioration of grasslands, and herd reductions. (9) Several government response and safety net programs partially offset negative socio-economic impacts of the 2001 and 2002 drought years [34]. In the future, drought frequency has been predicted to


#### **Table 3.**

*Sensitivity of prairie agriculture to climate change.*

increase under climate change; as projected, yields of various crops would decrease, thereby increasing the vulnerability of producers, particularly in semiarid regions of the prairies.

In addition to droughts, flooding of agricultural lands would also increase under climate change. Already, such events have occurred in various parts of the Prairie Region, affecting crop production. In Manitoba, for example, 2016/2017, the excess moisture losses accounted for 71% of total crop losses estimated at \$198.7 million [15]. Similar estimates for other two provinces are not available.

Although overall studies have been positive about impact of climate change on prairie agriculture, increased frequency of extreme events may dampen these beneficial impacts somewhat. A summary of these impacts is shown in **Table 3**. The region would have new opportunities open under the changed climate and some new crops may help the region in diversifying the regional agriculture mix. However, increased frequency of droughts and floods may make some regions more vulnerable in the future.
