Australian Farming Systems in a Changing World

Novel insurance to reduce environmental impacts of cropping: A case study for the Great Barrier Reef

Presenter: Dr. Peter Thorburn, Chief Research Scientist, Agriculture and Food, CSIRO

About the Series: Hosted by the Systems Program in CSIRO's Agriculture and Food Business Unit, this series explores the overarching theme "Australian Farming Systems in a Changing World". Researchers and international experts will discuss research advances in their implications for the productivity, resilience and sustainability of Australia's agricultural production systems at a time when they face a confluence of environmental and socioeconomic pressures.

Presentation Abstract: Agriculture stands at the crossroads of feeding a growing global population and contributing significantly to environmental degradation. One example is the impact of sugarcane cropping on the Great Barrier Reef (GBR) in north-eastern Australia. Sugarcane is an important crop in the region; however, nitrogen (N) from fertiliser applied to sugarcane is one of the main factors that harm health of the GBR. In many crops, including sugarcane, managing N fertiliser is an exercise in risk management: Farmers aim to apply sufficient N to minimise the risk that N deficiency will limit yields. This strategy results in over-application of N, polluting aquatic and marine ecosystems and increasing greenhouse gas emissions. As an alternative risk management approach, we developed a parametric insurance concept whereby farmers can insure against the risk that yields will suffer if N fertiliser applications are reduced. The concept uses the APSIM farming systems model to simulate yields at different rates of N fertiliser application. Simulations over the past 50 years, for which reliable climate data are available, are used to quantify the risk of yield loss which determines the insurance premium. Simulations over the life of the insured crop at the original and reduced N rates quantify the yield loss, if any, and thus payouts.

About the Presenter: Dr Peter Thorburn an agricultural scientist with strong multidisciplinary interests in the dynamics of soil-plant interactions. He applies digital skills, together with insights into technology adoption and economics to enhance the sustainability of agriculture, increasingly through tools such as financial instruments (e.g. insurance) and environmental market-mased instruments (e.g. carbon pricing mechanisms). These "instruments" change the risk/reward dimensions of farmer decisions and management. His research has won international awards and had substantial policy impact.

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This webinar series is moderated by Frank Sperling, Senior Principal Research Scientist, A&F, CSIRO.