IEc INDUSTRIAL ECONOMICS, INCORPORATED Responding to Climate Change in ECA Agriculture: Impact Assessments and Menu of Adaptation Options for Albania and Uzbekistan James Neumann Principal February 24, 2011

INDUSTRIAL ECONOMICS, INCORPORATED2 Overview Objectives of the study and consulting team Study process and timing Modeling approach – impacts and adaptation Stakeholder/farmer consultations Summary of results – Albania and Uzbekistan Overall recommendations – Albania and Uzbekistan

INDUSTRIAL ECONOMICS, INCORPORATED3 Objectives of the Study “Enhance the ability of four countries in Europe and Central Asia (ECA) to mainstream climate change adaptation into agricultural policies, programs, and investments.” The four countries are: Albania Moldova Macedonia Uzbekistan Strategies used: raising awareness of the threat analyzing potential impacts and adaptation responses building capacity among national and local stakeholders A key product of the work is a menu of adaptation measures for the agriculture sector – including crops, water resources, and livestock.

INDUSTRIAL ECONOMICS, INCORPORATED Study Components and Work Flow 4

INDUSTRIAL ECONOMICS, INCORPORATED5 Key Consulting Team Members James Neumann, IEc, Project Manager Kenneth Strzepek, Univ. Colorado and MIT, Technical Director Ana Iglesias, Univ. of Madrid, Agronomist and Crop Modeler Peter Droogers, FutureWater, Crop and Water Resources Modeler Janusz Kindler, Warsaw University of Technology, Water Resources Expert Richard Adams, Oregon State Univ. and Brent Boehlert, IEc, Agricultural Economists Samuel Fankhauser, Grantham Research Institute on Climate Change and the Environment, Economist & Expert Reviewer Andrew Schwarz, IEc, Participatory Process Expert

INDUSTRIAL ECONOMICS, INCORPORATED Modeling Approach 6

INDUSTRIAL ECONOMICS, INCORPORATED Modeling Approach – Climate Scenarios 7 Select three scenarios from among 56 IPCC AR4 options, intent is to capture relevant range for agricultural yield Selection based on Climate Moisture Index, combines temperature and precipitation forecast “Medium Impact” is roughly the mean; “High Impact” is driest, “Low Impact” is wettest.

INDUSTRIAL ECONOMICS, INCORPORATED8 Modeling Approach – Crop Yield and Water Resources Crop Modeling – Process-based models (e.g., AquaCrop) for up to 7 select crops – country nominates crops for focus Water Resource Availability “Screening Tool” – CliRun – projects runoff for all key basins in country Basin-level Water Balance Modeling – WEAP for all large basins in each country Agricultural water demand from crop model M&I water demand projections from EACC study Climate-induced water supply changes from CliRun

INDUSTRIAL ECONOMICS, INCORPORATED9 Other Dimensions of the Impact Assessment Geographic Scope: Agro-ecological zone, with representative crop modeling for each region. Time: Decadal averages from 2010 to 2050 (i.e., 2010s, 2020s, 2030s, 2040s) Economic Baseline: current conditions/markets, also IFPRI projections of market prices through NOTE: Goal of quantitative analysis is to estimate marginal effect of adaptation measures on farm-level net income, so it includes two components: Effect of measure on closing adaptation deficit to current climate Effect of measure in responding to forecast changes in climate

INDUSTRIAL ECONOMICS, INCORPORATED10 Capacity Building Workshop Conducted a formal training workshop at a central location for a specific impact assessment technique. In Albania and Uzbekistan, training focus was: Process-based crop modeling (e.g., AquaCrop) Also touched on how to integrate with basin-level water resources modeling (e.g., WEAP)

INDUSTRIAL ECONOMICS, INCORPORATED11 Farmer Engagement - Stakeholder Consultations Conducted in each AEZ, two sets of meetings First meeting, present draft impact results, and ask: Experts/analysts: Do the crop, livestock, water modeling results look reasonable to you? Farmers: What options would you employ in response to these outcomes? What other ideas do you have? Second meeting, present draft adaptation recommendations, and ask: Which of the recommended options do you favor? What barriers do you see to implementing the recommendations (economic, institutional, policy)? What options are missing from our list?

INDUSTRIAL ECONOMICS, INCORPORATED12 Develop Initial Menu of Adaptation Options Consider results of stakeholder consultations and quantitative modeling, six step process: 1. Generate farm-level estimates of net benefits of adaptation options, using readily available data 2. Rank initial set of adaptation options based on net benefit criteria 3. Add a second, qualitative ranking based on the recommendations of our expert team 4. Assess whether there is “win-win” aspect to measure 5. Add a third ranking based on stakeholder consultations 6. Consider other, country-level policy options (e.g., changes to water allocation scheme) qualitatively based on assessment of existing adaptive capacity

INDUSTRIAL ECONOMICS, INCORPORATED Results – Albania 13

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INDUSTRIAL ECONOMICS, INCORPORATED Crop Yield Effects – No Adaptation 17

INDUSTRIAL ECONOMICS, INCORPORATED Range of Crop Yield Effects Across Scenarios 18

INDUSTRIAL ECONOMICS, INCORPORATED Albanian Crop Water Demands – Percent Increase 19

INDUSTRIAL ECONOMICS, INCORPORATED Albania Monthly Runoff Estimates 20

INDUSTRIAL ECONOMICS, INCORPORATED Forecast Monthly Water Balance in 2040s 21

INDUSTRIAL ECONOMICS, INCORPORATED BCA for Rehabilitating Drainage in Lowlands AEZ 22

INDUSTRIAL ECONOMICS, INCORPORATED Farmer Consultation Results Responses differed in each AEZ, but in general top three ranked adaptations were: Rehabilitate infrastructure: Depending on the specific climate related risk faced by each AEZ, the priority infrastructure was for either irrigation or drainage. Increase institutional capacity: Increase the reach of extension services, focus on technical training, seed and crop selection knowledge transfer, and increasing the availability of hydro-meteorological information. Improve market structure: Farmers emphasized that overall market effectiveness would assist in making farms more productive and provide a “win-win” adaptive response. Need for processing and storage facilities. 23

INDUSTRIAL ECONOMICS, INCORPORATED Overall Recommendations - National 24 DESCRIPTION OF RECOMMENDED ADAPTATION MEASURE SPECIFIC FOCUS AREAS RANKING NET ECONOMIC BENEFIT: QUANTITATIVE ANALYSIS NET ECONOMIC BENEFIT: EXPERT ASSESSMENT “WIN-WIN” POTENTIAL FAVORABLE EVALUATION BY LOCAL FARMERS Improve Extension Capacity Seed varieties; more efficient use of water High Improve hydrometeorological capacity Short-term temperature and precipitation forecasts High (based on “break-even” analyses) High Improve agricultural information for policy support Soils (types and drainage qualities), General crop suitability Not evaluatedHigh Not mentioned Provide incentives to consolidate farm holdings None identifiedNot evaluatedNot mentioned Potentially High High Encourage private sector adaptation Seeds, livestock breeds, particularly on international market Not evaluatedPotentially High HighNot mentioned

INDUSTRIAL ECONOMICS, INCORPORATED Recommendations – AEZ Level 25 RELEVANT AEZS FOR MEASURE DESCRIPTION OF RECOMMENDED ADAPTATION MEASURE CROP AND LIVESTOCK FOCUS RANKING ECONOMIC BENEFIT: QUANTITATIVE ANALYSIS ECONOMIC BENEFIT: EXPERT ASSESSMENT “WIN-WIN” POTENTIAL FAVORABLE EVALUATION BY LOCAL FARMERS Lowlands, Intermediate, Southern Highlands Improve Drainage Infrastructure Tomatoes, Maize, Grapes, Wheat High LowlandsImprove irrigation water quality Tomatoes, Maize, Watermelon Not evaluatedNot mentionedHigh IntermediateImprove irrigation water use efficiency MaizeHighNot mentionedHighMedium Intermediate, Southern Highlands, Northern Mountains Rehabilitate irrigation system All irrigated crops Low to Medium depending on AEZ Not mentionedHigh LowlandsImprove access to climate-tolerant crop varieties Tomatoes, Grapes, Wheat, Maize, Watermelon HighMedium High AllOptimize fertilizer application Tomatoes, Olives, Wheat HighNot mentionedHighNot mentioned AllTransition livestock varieties to improve high temperature tolerance Beef cattle, Chickens Low in short- term, Medium in long-term Not mentionedLowNo support for changing animal types, only for new varieties Particular to Korca region Adopt hail netsOrchard crops, particularly apples High (from literature values) Not mentionedHigh Particular to Shkodra region Floodplain land- use management measures AllNot evaluatedHigh Medium

INDUSTRIAL ECONOMICS, INCORPORATED Uzbekistan AEZs 26

INDUSTRIAL ECONOMICS, INCORPORATED Uzbekistan River Basins 27

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INDUSTRIAL ECONOMICS, INCORPORATED Monthly Temperature and Precipitation for Piedmont AEZ 30

INDUSTRIAL ECONOMICS, INCORPORATED Uzbekistan – Yield Changes 31

INDUSTRIAL ECONOMICS, INCORPORATED Range of Crop Yield Results Across Climate Scenarios 32

INDUSTRIAL ECONOMICS, INCORPORATED Crop/Irrigation Water Requirements 33

INDUSTRIAL ECONOMICS, INCORPORATED Mean Monthly Runoff and Irrigation Demand – 2040s 34

INDUSTRIAL ECONOMICS, INCORPORATED Projected Unmet Water Demand for Irrigation 35 BASIN CLIMATE SCENARIO BASELOWMEDIUMHIGH IRRIGATION Syr Darya East1,087,906(19.2%)615,927(11.6%)940,601(17.5%)3,627,991(51.6%) Syr Darya West0(0.0%)122,023(1.9%)325,942(4.7%)2,817,031(34.4%) Amu Darya424,655(1.8%)2,174,069(8.7%)4,807,848(17.8%)8,405,243(28.9%) Aral Sea East0(0.0%)0 0 0 Aral Sea West0(0.0%)0 0 0 Subtotal1,512,560(4.2%)2,912,019(8.0%)6,074,391(15.4%)14,850,265(33.5%)

INDUSTRIAL ECONOMICS, INCORPORATED Farmer’s Preferred Adaptation Options Increase farmer know-how and skills through capacity building Improve extension services to small farmers. Improve farmers’ skills in countering the increased incidence of pests, especially for wheat and apples Improved training for pest-resistant, and/or heat-stress- tolerant seed and crop variety selection from both international and national markets Provide information on improving on-farm water use efficiency. Invest in on-farm irrigation infrastructure Improve the availability/affordability of crop insurance 36

INDUSTRIAL ECONOMICS, INCORPORATED Recommendations – National Level 37 DESCRIPTION OF RECOMMENDED ADAPTATION MEASURE SPECIFIC FOCUS AREAS RANKING NET ECONOMIC BENEFIT: QUANTITATIVE ANALYSIS NET ECONOMIC BENEFIT: EXPERT ASSESSMENT “WIN-WIN” POTENTIAL FAVORABLE EVALUATION BY LOCAL FARMERS Improve extension capacity Seed varieties; more efficient use of water High Improve crop insurance affordability and streamline implementation Drought damage; pest damage Not evaluatedHigh Encourage private sector adaptation Seeds, from international market Export options for vegetable crops Not evaluatedPotentially High HighNot yet mentioned

INDUSTRIAL ECONOMICS, INCORPORATED Recommendations – AEZ Level 38 RELEVANT AEZS FOR MEASURE DESCRIPTION OF RECOMMENDE D ADAPTATION MEASURE CROP AND LIVESTOCK FOCUS RANKING ECONOMIC BENEFIT: QUANTITATIV E ANALYSIS ECONOMIC BENEFIT: EXPERT ASSESSMEN T “WIN-WIN” POTENTIAL FAVORABLE EVALUATIO N BY LOCAL FARMERS AllImprove irrigation water use efficiency Tomatoes (all but Highlands) Potatoes Wheat Apples High Piedmont – Syr Darya Basin Rehabilitate irrigation system All irrigated crops High but dependent on AEZ and basin water availability High Medium AllImprove access to climate- and pest-tolerant crop varieties Tomatoes, Potatoes, Apples, Grapes, Wheat, Cotton HighMediumHigh AllOptimize fertilizer application Tomatoes, Olives, Wheat High, but incomplete analysis High Medium AllTransition livestock varieties to improve high temperature tolerance Beef cattle, Chickens Not evaluatedNot mentioned LowMedium; some support for new varieties

INDUSTRIAL ECONOMICS, INCORPORATED Final Thoughts All countries have been receptive to the concept, and generally supportive of our work Cooperation from local governments was initially good, but data was very sparse – needed to use global data in many instances Farmer workshops were more productive and engaging than expected – more could be done with that format in follow-up Major challenge in separating current adaptation deficit from needs to adapt to changing climate – but perhaps we can do some work in that direction in regional report 39

INDUSTRIAL ECONOMICS, INCORPORATED Detailed BCA Results – Sensitivity Analyses 40

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