Key Policy Ideas to Help Philippine Agriculture to Prosper Under Climate Change

By Timothy S. Thomas and Mark W. Rosegrant

Plane model tested inside a wind tunnel.

Before a new passenger jet is built, a much smaller model of the jet is built and then tested in a wind tunnel.  The wind tunnel shoots very fast moving air past the model, revealing important information about airflow over the wing and structural stability of the aircraft under various conditions. Testing a model in this way helps engineers catch any unanticipated problems their design might have, and then make corrections before large amounts of money are invested to construct the actual jet and make it ready for flight.

We can draw an analogy to climate change. We know that climate change is likely to be very costly, and that various policies that could be used to help reduce the negative economic impact of climate change have sizable price tags associated with them. Using models to consider how well each policy would work can make a lot of sense.  Since agriculture is the sector most affected by climate change, climate scientists, agronomists, and economists have developed many different models that can be used to understand how the climate is changing, what effect that will likely have on crop productivity, and how those changes will impact economic development and food security.

A team of researchers and scholars from several Philippine universities, NEDA, and the International Food Policy Research Institute (IFPRI) -- which is based in Washington, D.C. -- spent the last year and a half developing models and analyzing data to determine the likely climate impact on agriculture in the Philippines, and to evaluate policies that would position the nation in the best way to adapt and capitalize on the coming changes.  The results are expected to be published in early 2016 in a book called The Future of Philippine Agriculture: Scenarios, Policies, and Investments under Climate Change.

Using biophysical modeling, researchers determined that rainfed maize in the Philippines will have yields reduced by 19% in 2050 compared to what they would have been without climate change.  Given that maize is the third most important crop in the Philippines (based on harvested area) and that consumption of maize in the Philippines should double between 2010 and 2050, it is essential that a strategy be developed for adaptation of maize to climate change.

It is well known that maize yields tend to decline whenever temperatures rise above 30 degrees. Furthermore, the current median temperature for the Philippines is 30.1 degrees for the warmest month of the year -- and this is expected to rise by up to 2.5 degrees between 2000 and 2050.  Such a change clearly increases the abiotic stress on Philippine maize.

On the other hand, maize yields in the Philippines are around 2.7 tons per hectare, while counties in the United States that experience mean daily maximum temperatures for the warmest month at between 33 and 34 degrees averaged 8.2 tons per hectare between 2005 and 2010.  This suggests that even with higher temperatures brought about by climate change, there is considerable potential for yield growth in the Philippines, even using current technologies -- as long as sufficient funding is available for agricultural research and extension activities, to develop new varieties and techniques, and disseminate that information to farmers.

Given that a 24% yield reduction is anticipated for the rest of the world for rainfed maize, Philippine farmers are at a slight advantage over their competition, despite expecting setbacks from how things would be without climate change.

Another important finding from the biophysical models is that losses for other major crops due to climate change is expected to be modest, and that yield reductions will generally be highest in Luzon, followed by Visayas, and lastly by Mindanao.  Such differences suggest that separate plans for adapting to climate change should be developed for each region rather than a one-size-fits-all plan.

When we apply the anticipated yield changes to a bioeconomic model -- a global partial equilibrium model of food and agriculture, IMPACT -- we discover that without climate change, increases in global population and shifts in consumer demand should drive the price of corn, rice, and wheat 31%, 26%, and 24% higher.  But with climate change also taken into consideration, prices are projected to rise instead by 90%, 59%, and 42%.  Such increases give farmers great incentive to increase production.  But when these grains are imported, as has been the case for the Philippines (and will likely continue being the case), these price increases actually put a greater strain on the Philippine economy and on the Philippine consumer.

Taking the modeling one step further, researchers developed another bioeconomic model -- the Phil-DCGE computable general equilibrium model -- that takes into account the full effect of climate change on all sectors of the economy. Using such a model, we learn a number of things, many of which we had not expected.  First, that because global agricultural prices rise so much under climate change, losses from productivity effects of climate change are more than compensated, helping farmers gain, but not consumers, particularly poor urban consumers.

We also learn that the greatest gain for Philippine agriculture will be in the export crop subsector, while livestock and staple crops will both generally lose.  Due to shifts in prices throughout the world from climate change impacts on agriculture, the model also tells us that returns to land, unskilled labor, and livestock will rise, while returns to capital and skilled labor will fall.  Along with returns to these production inputs, the model also projects a negative net effect on the industry and service sectors, off-setting gains from agriculture.

Using these findings, policymakers can invest more wisely to counteract some of the negative impacts of climate change, and capitalize on the some of the positive findings concerning climate change.  For example, investing in increasing rice productivity should lead to better returns than reducing the agricultural tariff.  Also, investing in developing a heat tolerant corn variety for the Philippines would go a long way toward reducing foreign exchange costs from importing livestock feed under a hotter future.

Flying back to the United States after our visit to the Philippines to discuss these modeling results, our plane experienced three continuous hours of turbulence as we passed through the remnants of a typhoon that had recently buffeted Japan.  We were sure thankful that plane had been rigorously tested in wind tunnels as it was being developed, so that it could withstand the rigors of extended periods of turbulence.  Just as we came through the journey on our jetliner no worse for the wear, we trust that as a result of our multiple models and ongoing preparation, the same will be true for the Philippine economy.