| Key Points |
- Climate change has already cut average Australian broadacre farm profits by around 23 per cent since 2001, hitting south west and south east regions hardest.1
- By 2050, hotter conditions and less cool season rain are expected to increase drought risk across the Wheatbelt and Murray–Darling Basin, especially under high emissions scenarios.2
- ABARES modelling suggests farm profits could fall by up to about 50 per cent nationally by 2050 in severe climate scenarios without further adaptation.3
- Wheat, barley and canola face higher heat and drought stress in low rainfall zones, with production likely to keep shifting toward higher rainfall fringes and some southern regions.4
- Irrigated cotton and key horticulture industries are highly exposed to tighter water allocations and more variable inflows in the Murray–Darling Basin.5
- Governments have statements and strategies, yet gaps remain in land use planning, water governance, rural infrastructure and transition support for affected communities.6
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Across Australia’s vast farm belt, the climate story that once sounded like a distant warning is now running through balance sheets, crop maps and town main streets.
The country has already warmed by around 1.5 degrees since 1910, with more hot days and fewer cold nights, and the trend is projected to intensify by mid century.2
Cool season rainfall has fallen markedly across southern Australia, especially in the south west and parts of the south east, cutting inflows to dams and soil moisture that broadacre cropping relies on.2
ABARES estimates that changes in seasonal conditions since 2001 have already reduced average broadacre farm profits by about 23 per cent or $29,200 per farm each year, with the biggest hits in cropping regions of Western Australia, South Australia, Victoria and New South Wales.1
Looking ahead to 2050, national projections point to more intense heat extremes, longer periods in drought and further declines in winter and spring rainfall across much of the main grain and livestock zones.2
These shifts will not fall evenly, leaving some regions facing escalating production risk, others relatively buffered, and some seeing new crop opportunities as climate bands move.
Major crops such as wheat, barley, canola and cotton are expected to face higher heat and water stress in lower rainfall and northern fringes, while parts of southern and coastal regions may retain or even gain comparative advantage under some scenarios.4
At the same time, more variable inflows and hotter temperatures threaten the reliability of irrigation that underpins high value horticulture in regions such as the Murray–Darling Basin, Sunraysia and the Riverland.5
Yet while governments have begun to recognise these risks in national statements and adaptation plans, key gaps remain in how land use, water, infrastructure, insurance and community support are aligned with the climate that farmers are likely to face by mid century.6
For regional planners and policymakers, the next five years will be critical in deciding whether Australia’s farm regions arrive in 2050 as controlled landing zones or hard hit frontlines.
High risk regions by 2050
By the 2041–2060 period, climate models assessed by the Bureau of Meteorology and CSIRO indicate continued warming across all of Australia and further declines in cool season rainfall for large parts of the southern and eastern mainland, especially under higher emissions scenarios.2
These changes line up with ABARES modelling that shows the greatest climate related pressure on farm profitability in broadacre regions of south west Western Australia, the Murray–Darling Basin and other southern grain belts.1
South west Western Australia, including much of the WA Wheatbelt, has already seen around a 16 per cent drop in April to October rainfall since 1970, and projections point to further drying and more time spent in drought, putting rainfed wheat, barley and canola systems at high risk.2
In the Murray–Darling Basin, a combination of higher temperatures, lower average cool season rainfall and more intense droughts is expected to reduce surface water availability and increase competition between irrigation, towns and the environment, raising risks for irrigated cotton, rice, grapes and fruit production.2
ABARES projections suggest that under more severe future climate scenarios, without further adaptation, average farm profits could decline by up to around 50 per cent nationally by 2050, with the largest proportional falls in already marginal and drier regions on the northern and western edges of current cropping zones.3
For many towns in these belts, the combination of lower average yields, more frequent poor seasons and higher operating costs will test the viability of smaller farms and related local businesses.
Medium and lower risk regions
Not all agricultural regions face the same level of exposure, and projections suggest some coastal and higher rainfall zones may be relatively less affected in terms of water availability, at least under moderate emissions pathways.2
Parts of Tasmania and some higher rainfall fringes of south east South Australia and south west Victoria are projected to see smaller reductions or even slight increases in cool season rainfall in some seasons, leaving them better placed to support rainfed grains, pastures and horticulture as conditions deteriorate elsewhere.2
Northern Australia presents a more mixed picture, with evidence of increased rainfall and streamflow in some monsoonal regions since the 1970s and low confidence in the direction of future rainfall change, though higher temperatures and evaporative demand are likely to challenge extensive grazing systems and any future expansion of irrigated cropping.2
These medium and lower risk regions are not immune to heat extremes, fire weather and market shocks, yet they are comparatively better placed to host some of the crop and livestock production that may migrate away from the most drought exposed areas.2
Crop futures: wheat, barley, canola and cotton
Australian grains research points to a long term trend of wheat, barley and canola production shifting towards higher rainfall and more reliable parts of the Wheatbelt and away from drier margins, partly in response to climate pressures since the 1990s.4
Analyses cited by ABARES indicate that climate change has already reduced Australian wheat yields by in the order of a quarter since 1990 relative to a stationary climate, with notable impacts in drier south western and south eastern cropping regions, although improved management and technology have offset some of these losses.4
By mid century, higher average temperatures, more hot days during critical flowering and grain filling stages, and reduced cool season rainfall are expected to increase yield variability for dryland cereals and oilseeds in low rainfall zones such as the northern edge of WA’s cropping belt, parts of inland New South Wales and central Queensland.4
Conversely, some modelling suggests that under moderate warming, shorter season wheat and barley varieties combined with improved water use efficiency could maintain or modestly increase average yields in higher rainfall southern and coastal zones, although this depends on emission pathways and adaptation investment.4
For cotton, which is heavily concentrated in the Murray–Darling Basin and northern New South Wales and Queensland, the main climate risks are tighter, more volatile water allocations and extreme heat, which can damage bolls and shorten growing windows.5
Under scenarios where inflows into key Basin storages decline and competition for water intensifies, irrigated cotton production is likely to face more frequent cutbacks and pressure to shift toward more water efficient systems or alternative crops.5
Horticulture and water security
The horticulture sector, which includes fruit, vegetables, nuts and vines, is particularly sensitive to both short term climate variability and long term trends, given its reliance on secure irrigation and narrow temperature bands for quality and timing.7
Studies coordinated through the Climate Change Research Strategy for Primary Industries note that Australia’s increasingly variable climate and water constraints make horticulture inherently vulnerable, especially in irrigation dependent regions such as Sunraysia, the Murrumbidgee, the Goulburn Valley and parts of Queensland and Western Australia.7
Projected declines in cool season rainfall and streamflows across much of southern Australia are expected to increase competition for water between high value horticulture, other irrigated crops, town supply and environmental flows, raising the stakes for water sharing rules and infrastructure performance.2
In some coastal and Tasmanian regions where water availability may be less constrained and temperatures more moderate, there may be opportunities for expanded horticultural production, although this will require careful planning to avoid new environmental and biosecurity pressures.2
Uncertainty and climate scenarios
Climate projections for Australia to mid century are not a single forecast but a range of plausible futures that depend on global emissions pathways and how sensitive regional rainfall is to warming.2
There is high confidence that temperatures will continue to rise, bringing more heat extremes and higher evaporative demand, and that cool season rainfall will decline on average across much of southern Australia, although the exact size of the rainfall change varies between models.2
For northern Australia, there is low confidence in the direction of long term rainfall change by late century, meaning that mid century planning must accommodate both wetter and drier possibilities while recognising that hotter conditions will increase water stress in any case.2
ABARES emphasises that its estimates of potential profit declines by 2050 in severe scenarios do not factor in further adaptation, so realised outcomes will depend heavily on how rapidly farmers, industries and governments invest in new practices and risk management tools.3
Policy gaps: land, water, infrastructure and insurance
Despite clear evidence of emerging climate risks, Australian policy on climate change and agriculture remains a patchwork of federal, state and commodity based initiatives rather than a coherent national adaptation framework for farm regions.6
The Productivity Commission has previously identified regulatory and policy barriers to effective climate adaptation, including land use planning rules that do not adequately account for changing hazards, fragmented responsibilities and weak signals about who bears climate risks.8
In land use planning, zoning and development assessment often lag behind emerging climate risk maps, allowing new housing, intensive agriculture and infrastructure to be placed in areas likely to face more frequent drought, fire or flood stress over coming decades.8
Water governance in the Murray–Darling Basin and other systems has improved transparency, yet climate change is expected to reduce the reliability of historic allocation rules, and there is ongoing debate about how to share increased shortfalls between irrigation, towns and the environment.5
Rural infrastructure, from roads and bridges to digital networks and energy supply, is under pressure from more extreme weather, and current investment pipelines do not always prioritise projects that would enhance climate resilience in high risk farm regions.5
Insurance markets are also adjusting, with evidence that premiums for some climate exposed assets are rising or coverage is being restricted, which can leave smaller farm businesses and regional councils carrying more residual risk unless public risk sharing mechanisms are updated.5
Economic and social consequences for regions
Climate change is already affecting the economic performance of regional Australia, with estimates that changes in climate since 2000 have reduced average broadacre farm profits and contributed to slower agricultural productivity growth.1
Research on past droughts suggests that prolonged dry periods can cut agricultural income significantly and reduce employment in affected regions by thousands of jobs, with flow on impacts to local services, population and social cohesion.9
As climate pressures intensify, there is a risk that some already vulnerable communities in the most exposed belts will experience a slow erosion of farm numbers, youth out migration and a shrinking rates base, complicating councils’ ability to maintain infrastructure and services.
At the same time, regions that can combine relatively favourable climate exposure with new investment in renewable energy, value added agriculture and climate resilient infrastructure may be better placed to attract people and capital, widening disparities between districts.2
What governments can do now
Experts across ABARES, the Productivity Commission and state adaptation programs point to practical measures that can be taken in the 2020s to reduce long term agricultural risk rather than waiting for impacts to fully unfold.1
First, governments can embed latest climate projections into statutory regional plans and zoning schemes, steering new intensive agriculture, housing and critical assets away from areas projected to face the most severe declines in water availability and the highest hazard exposure.8
Second, water reform can be updated to test allocation frameworks against mid century dry scenarios, invest in modernising irrigation infrastructure where it delivers clear efficiency and environmental gains, and strengthen mechanisms for trading and sharing risk within and between valleys.5
Third, targeted extension and whole farm planning support can help producers adopt climate smart practices and technologies, with studies showing that integrated planning can raise profits even under more variable and warming conditions when combined with suitable crop choices and risk management tools.10
Fourth, rural infrastructure programs can be refocused to prioritise projects that enhance climate resilience, such as all weather freight routes, resilient power systems, communications and community facilities in high risk regions identified by climate and economic analysis.5
Finally, governments can work with industry and communities to design transition support for places likely to see structural adjustment, including retraining, regional diversification strategies and mechanisms to manage the social impacts of farm consolidation and changing water use.6
The next five years
Over the next five years, regional planners and policymakers need to lock in climate informed land use plans, stress test water and infrastructure systems against mid century scenarios, and scale up on farm adaptation support in the most exposed regions so that by 2050 Australian agriculture is operating within, rather than being overwhelmed by, the realities of a hotter, drier and more variable climate.1
References
- ABARES – Climate change impacts and adaptation on Australian farms
- CSIRO and Bureau of Meteorology – State of the Climate 2024
- ABARES – Climate change research and future farm profitability scenarios
- ABARES – Simulating the effects of climate change on the profitability of Australian farms
- Climate Council – How climate change is damaging Australia’s economy
- Australian Government – National Statement on Climate Change and Agriculture
- CCRSPI – Climate change and the Australian horticulture industry
- Productivity Commission – Barriers to Effective Climate Change Adaptation
- Climate Council – Economic impacts of droughts and extreme weather on regional Australia
- Scientific Reports – Whole farm planning raises profit despite burgeoning climate risk
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