Climate Corner
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No one is more susceptible to severe storm damage than our farmers. This is as true for Door County’s cherry and apple growers, as it is for Wisconsin farmers who grow corn, soybeans and other crops. The evidence is mounting that an increase in severe weather is directly tied to climate change. While the impacts of the gradual warming the earth is experiencing may have appeared theoretical in the past, they are very real today for our farmers and the companies that insure their crops.
Eight years ago as the Wisconsin Insurance Commissioner, I began examining climate change models to see how the Midwest would likely be affected. Although average precipitation did not appear to change substantially in the near term in many models, the intensity of rain, snow, sleet and hail storms did. The result clearly would be increased risk of damage to crops, resulting in higher costs for farmers, their customers and their insurers.
A recent USDA report on climate change and agriculture in the United States indicates that climate change is expected to have a detrimental effect on most crops and livestock by mid-century and beyond. I believe that it is clear that the changes predicted by scientists are already occurring. There is no question the companies that provide crop insurance agree. They are very concerned about the increased underwriting risks they face. Insurance companies cannot ignore scientific consensus when analyzing risk and stay in business.
Crop production is influenced by complex relationships with temperature, precipitation, carbon dioxide concentrations, weeds, pests and disease. Small changes in climate affect each of these variables. This year we witnessed a shortened growing season due to a brutally cold winter in combination with a very wet spring that delayed planting well into May. We know firsthand that more intense storms, some that carry hail or generate tornados, can wipe out entire fields of corn or large sections of orchards.
As we seek ways to adapt, as we must, science and economics collide on climate change when it comes to insurance. For the farmer, insurance is handled through the Federal Crop Insurance Program. The program was created in response to the Dust Bowl in the 1930s. A crop insurance contract is a commitment between the insured farmer and his or her insurance provider working under the program. In addition to crop loss, the policies typically indemnify the insured for other adverse events, such as the inability to plant and excessive loss of quality due to adverse weather.
Current crop insurance and related federal farm subsidies tend to encourage farmers to continue with a status quo approach to planting, rather than taking steps to adapt to change. This incentive runs counter to the need to modify farming practices in the face of a changing climate. As intense storms rip through the Midwest, corn may no longer be well suited to this region. It’s clear from the recent USDA Report that climate change will eventually force shifts in crop production areas, and increase in pest control expenses and disease prevalence. The question is whether we will wait for the harm to be severe or proactively protect the economic health and productivity of our farms.
Without a change in farming, crop insurance will be increasingly expensive in the future. The USDA needs to help farmers adapt to climate change, not encourage them to maintain the status quo. Our farmers need to aggressively manage to meet change, while our government’s programs need to be redesigned to incentivize farmers to grow the resilient crops in our changing environment. In addition to crop insurance, we have a complex array of subsidies and quotas that could be used to support wise adaptation.
Without aggressive management of change by farmers, and by federal agencies such as the USDA, we may once again experience severe weather-related disasters like the Dust Bowl.
However, as farsighted farming practices could have helped prevent huge quantities of topsoil from blowing away due to prolonged drought and high winds in the 1930s, so climate change adaptation strategies developed by our farmers, working with our scientists, can mitigate the adverse effects that climate change is likely to cause without such strategies.
There’s a saying when we examine risk: when one is floating on a life raft in the middle of the oil slick and there is fire on the horizon, it is too late. In Wisconsin, we don’t need to see flames to know we need fire protection!
Sean Dilweg served as the Wisconsin Insurance Commissioner from 2007 to 2011. During that time he chaired the National Association of Insurance Commissioners Climate Change Study Committee. He testified before Congress on climate change and its effect on insurance companies. Through his efforts the SEC adopted requirements on all publicly traded companies to disclose how climate change will affect their business.