I returned from a ten day stay in Milan where I attended both the International Conference of Agricultural Economists (ICAE) triennial meeting as well as a workshop on climate smart agriculture sponsored by FAO. Milan is known as the “city that works” in Italy, and indeed I marveled at its modernized public transportation, cleanliness, and elegance. Of course, it also has its share of magnificent older buildings, churches, and neighborhoods that are a must see when visiting Italy.Of course, it also has its share of magnificent older buildings, churches, and neighborhoods that are a must see when visiting Italy.
The ICAE conference was held on the campus of the University of Milan—a converted hospital that was built in the 15th century. It is the best venue of the best-run conference I have attended in many years. The FAO workshop took place in a palace that was built by a rich merchant in the 18th century, was the home of the Austrian queen, then sold to Napoleonic government in 19th century, and is now owned by the Italian government. It has a marvelous mirror room and a great yard for lunches and other outdoor activities. The workshop focused on a line of ongoing research on how climate change considerations should affect agricultural investments and policies in developing countries in the near future (the next 15-20 years). It emphasized identifying effective strategies for adaptation to (rather than mitigation of) climate change, and assessing their impacts.
It is predicted by the IPCC and other notable groups that the main short term effect of climate change is the increased likelihood of extreme weather events (droughts, typhons, etc.). In the longer run (after 2040), climate change may lead to rising water levels and significant “migration of weather” (e.g. the weather in San Francisco in the future may be similar to the current weather of Los Angeles). The main forms of adaptation to long run changes include innovation and adoption of alternative agricultural practices and economic activities or migration away from locations where farming and livelihood become unfeasible to new locations . The main proposed forms of adaptation to the short term increases in the likelihood of extreme weather events are adoption of more climate resilient crop varieties and management practices and introduction of crop insurance and input subsidies. Based on this background and the discussion in the workshop, I developed my own conclusions on the design of effective adaptation strategies for the near future.
First, agricultural investment activities in the near future should address both long and short term challenges of climate change. While weather migration and rising water levels may be outcomes in the distant future, designing investments to protect against rising water levels and the development of institutions and arrangements that will foster migration requires significant lead time.
Second, agriculture is evolving regardless of climate change, and investment and adaptation strategies should be forward looking and aim to address emerging agricultural realities, not the realties of the past. Smallholders across the world are becoming less autarkic and are engaging more frequently in trade, as more and more of them own cell phones and even bicycles. They sell to supermarkets and hold jobs outside of the farm. Thus, the introduction of production practices that will increase average productivity and earnings that contribute to financial resilience can be an important component of adaptation strategies. Further expansion of agricultural trade networks, transportation and communication channels, and access to credit markets that will allow farmers to save and borrow at reasonable rates will also be valuable in addressing crisis situations.
Third, the emphasis on the introduction of resilient farming and other practices that will help to withstand weather shocks has its limits. Climate resilient strategies are very desirable if they are not very costly in terms of average yield or income. Moreover, resilient strategies have their limitations, as they may not be able to withstand the worst-case scenarios (severe drought or flooding). The build up of agricultural resilience should be accompanied by construction of modern roads and building up local storage as a safety measures for extreme situations. That suggests that research on adaptation should quantify the cost of resilience strategies, which will allow parties to determine which ones to use, where, and to what extent. Research should also be conducted on the feasibility and financial viability of insurance schemes as a mechanism to address increases in the likelihood of extreme events, and its use limited to situations where it is economically viable.
Fourth, the objective of agricultural development strategies should be that farmers will thrive, not merely survive. Thus, assuring food security is a threshold, but agricultural and development strategies should aim higher. While assuring a competitive farm sector consisting of many smallholders is a valuable objective, we need to realize that sometimes farms may be too small to succeed (the opposite of too big to fail). Policy-makers should not aim to prop up small farms at any cost, and natural processes of migration away from farming and consolidation resulting in fewer, but stronger, small farmers may be welcome and will enhance their ability to withstand the challenge of climate change.
Fifth, farmers in developing countries are continuously engaged in global supply chains, which are vulnerable to extreme weather and other impacts of climate change, and private sector firms are engaged in adaptation activities of their own. Coordination and planning of climate change policies should be synergistic with activities of the private sector, and emphasize public sector efforts to complement rather than compete with the private sector.
Our workshop in Milan helped us to develop priorities for future research efforts. The beauty of Milan and its historical heritage are inspiring, but to be effective, we need to go out to the field, solidify our analysis, and verify and update our initial conclusions.
 A special thanks to my partners Leslie Lipper, Nancy Mccarthy, Solomon Asfaw, and Giacomo Branca who organized the workshop.