ECON1604: Economic Impact of Climate Change on Australian Industries

This report provides a comprehensive analysis of the agriculture, fishery, and forestry industries in Australia, examining their significance to the national economy. It explores the economic contributions of these sectors, including their role in exports and employment, while also addressing the challenges they face, such as water pollution, illegal fishing, and the impacts of climate change. The study calculates type I multipliers to assess the economic impact of these industries and investigates the effects of budget cuts and climate change on production and trade. A literature review summarizes relevant research, and recommendations are provided for government and individual actions to foster sustainable growth and mitigate the adverse effects of climate change. The analysis concludes with a discussion on the interconnectedness of these sectors and the need for careful policy to ensure their continued contribution to the Australian economy.

ECON1604 QUANTITATIVE ANALYSIS

CONTENTS
INTRODUCTION......................................................................................................................3
SIGNIFICANCE OF AGRICULTURE, FISHERY AND FORESTRY INDUSTRY IN
AUSTRALIAN ECONOMY.....................................................................................................3
CHALLENGES BEING FACED BY AGRICULTURE, FISHERY AND FORESTRY
INDUSTRY IN AUSTRALIAN ECONOMY...........................................................................3
CALCULATIONS OF THE TYPE I MULTIPLIERS..............................................................4
IMPACT OF THE BUDGET CUT............................................................................................5
IMPACT OF THE CLIMATE CHANGE.................................................................................5
IMPACT OF THE CLIMATE CHANGE AUSTRALIA’S EXPORT......................................6
LITERATURE REVIEW...........................................................................................................6
RECOMMENDATIONS...........................................................................................................8
CONCLUSION..........................................................................................................................8
REFERENCE.............................................................................................................................9
APPENDIX..............................................................................................................................10

Introduction
Economy of Australia is has been performing impressive since the last two decade. The credit
for the exceptional performance of the economy goes to the different sectors that support the
economy. These sectors of the Australian economy is also influenced by different other
factors including the climate change and the performance of the other countries of the world.
The objective of the study is to find out the contribution of agriculture, fishery and forestry
industry in the Australian economy. The paper also examines the impacts of the climate
change in the Australian economy through direct and indirect challenges.
Significance of agriculture, fishery and forestry industry in Australian economy
Australia has been a major producer and exporter of many agricultural products such as rice,
sugar, cotton grapes and many more. Beilin et al. (2019) stated that 67% of the total
agricultural product of the country is exported to the trade partners and hence performance of
their economy has a huge role to play in stabilising the Australian economy. This sector also
employs more than 450000 workers providing a lot of support to the national workforce of
Australia as well. The products of this sector are also used in the other sector such as food
processing sector and hence agriculture industry is important for Australian economy.
Fisheries also play a big role for the overall economic growth rate of the country. Although
the production of this industry is mostly exported to the foreign countries a part of the
produce goes to production in the other sector as an input too. Australia is the major exporter
of fishery product in the Asia pacific area and hence economic performance of this region
significantly control the economy of the Australia. Forestry is another industry of the
economy that helps the economy to growth impressively. According to the data of 2018, the
forestry industry contributed $3 billion dollar to the national product of the country
(Longden, 2019). There are some tress in the forest of Australia which is unique to this
continent and has a huge demand in the world market. Australia makes a huge profit from
this uniqueness and the demand.
Challenges being faced by agriculture, fishery and forestry industry in Australian
economy
There are a number of challenges which is being faced by these industries of Australia and it
is also affecting the productivity level of the economy as well. For example, unavailability of
the clean water due to the water pollution is one of the serious challenges for the growth of

the agriculture sector of the country. Banwell et al. (2018) stated that, contaminated water
supply to the soil is not only reducing the quality of the soil it also leading to a deteriorating
quality of the products. Apart from that, the fishery industry is also facing challenges from
the side of the illegal agents who are fishing without any authority. Gasparrini and Vicedo-
Cabrera (2019) stated that a sudden decrease in the production of marine products due to the
illegal operation can snatch its competitive edge over the other rivals of the market as well.
Climate change is a problem that is affecting the forestry sector of the country. Recently the
country saw a wildfire that killed a number of animals in the wild that can further disrupt the
ecosystem of the forest.
Calculations of the type I multipliers
i) The calculations for the type I matrices have been shown in the appendix

Industry Agriculture, Forestry and Fishing Support Services
Cattle and Sheep -4.26634E-05
Poultry and Other Livestock -0.000209203
Agriculture, Forestry and Fishing Support Services 1.011365984
Coal mining -0.00010177
Oil and gas extraction 0.000819827
Meat and Meat product Manufacturing -0.000831177
Grain Mill and Cereal Product Manufacturing -1.7587E-05
Beer Manufacturing 0.00035805
Clothing Manufacturing -0.000578011
Petroleum and Coal Product Manufacturing 0.004343666
Veterinary Pharmaceutical and Medicinal Product Manufacturing 0.000420891
Basic Chemical Manufacturing 0.009198144
Specialised and other Machinery and Equipment Manufacturing -0.066870507
Electricity Generation -0.001245283
Water Supply, Sewerage and Drainage Services -0.00317478
Heavy and Civil Engineering Construction 0.000265374
Construction Services 0.016007898
Retail Trade -0.001535572
Accommodation -0.000174809
Food and Beverage Services -0.002450296
Rail Transport -0.000105348
Transport Support services and storage -0.004207369
Publishing (except Internet and Music Publishing) -0.001522045
Telecommunication Services -0.021523251
Finance 0.001706162
Auxiliary Finance and Insurance Services -0.002540241
Rental and Hiring Services (except Real Estate) -0.0892793
Professional, Scientific and Technical Services -0.068951901
Employment, Travel Agency and Other Administrative Services -0.029324621
Public Administration and Regulatory Services -0.00522958
Automotive Repair and Maintenance -0.0102884
Other Repair and Maintenance -7.16306E-05
Total 0.734210654
Table 1: The calculations of the type I multiplier of the sector
(Source: Developed by the learner)
The type I multiplier for the agriculture, fishery and forestry sector is 0.73. That means with a
$1 change in the final sales of the goods and services this sector is impacted by $0.73. That
means this sector is very much important for the economy of Australia.
iii)
Two industries which are important for the Australian agriculture, fishery and forestry
industry are finance and the professional scientific and technical services. The products from
this sector are used as an input to the production of agriculture, fishery and forestry industry

of Australia. From the metric, the multiplier for finance is 0.927912784, that means changes
in the sales of the finance industry influences the production of Australian agriculture, fishery
and forestry industry. The type I multiplier of the professional scientific and technical
services is 0.890042925. Finance is required for the operation where the scientific and
professional service industry provides the technological knowhow in the production process.
Impact of the budget cut
Due to the cut in the budget for the transportation services and the poultry and livestock
services the production of the agriculture, forestry and fishery will reduce as the
transportation is an important input to the production of agriculture, forestry and fishery
industry. Due to the cut of the budget, cost of production in this sector will increase leading
to a rise in the price of goods and the services produced (Voyer et al. 2017). Apart from that,
products from the agriculture, forestry and fishery industry is used as an in input to the
production for the poultry and the livestock services. The cut in the budget will result in a
reduced demand for the products of agriculture, forestry and fishery industry and hence the
price will rise in general.
Figure 2: The impact of the budget cut
(Source: Developed by the learner)
Impact of the climate change
China is one of the largest importers of the products produced by agriculture, forestry and
fishery industry of Australia. As discussed above, the economic performance of Asia pacific
significantly influences the economic performance of Australia. Now, climate change is a
major issue that can influence the economic performance of China. First and the foremost the
climate change can reduce the productivity of the Chinese labour and hence the economy
may become more dependent on the export of Australia. In that case, China will be the loser

and Australia will be the winner as Australia will experience a rise in the demand for the
products they export to China. Climate change also resulted in extreme rainfall in China that
resulted in poor agricultural production in the last year. This also makes Chinese economy
vulnerable to the climate changes and more dependent on Australian economy (Shezan et al.
2017). Therefore in the long run, in the context of the relationship with China, Australian
economy will be winner with the changes in the climate.
Impact of the climate change Australia’s export
Although Australia can emerge as a winner in the case of a trade relationship with China,
there may be cases where Australia can be a victim of the climate change as well. The climate
change in the world can reduce the demand for the goods and the services in the future
leading to a fall in the demand for the exported goods of Australia in general. (Basto et al.
2016) contrasted that, the mining and the coal production sector of the Australian economy is
the strongest in the world due to the boom that it experienced a few years ago. Therefore
Australia can maintain a huge demand for the export at least in the mining products.
However, climate change can definitely affect the cost of operation of the fishery and forestry
sector. The wildfire due to increase in the temperature has already contributed to the cost
incurred by the government. However the Australian individual can do a few things in their
level in order to reduce the effect of the climate change on the Australian economy. These are
listed below:
 Use resources which are renewable such as the solar power.
 Use appliances which are more energy efficient in general.
 Individuals can also refrain from using plastics.
Literature review
Name of the
study
Author Country Methods Main findings
Accelerating
precision
agriculture to
decision
agriculture: the
needs and
Zhang, A Australia Qualitative
Analysis
The paper finds
out that with the
introduction of
the technology
such as
communication

drivers for the
present and
future of
digital
agriculture in
Australia
the contribution
of the
agriculture
sector of
Australia can be
increased
manifold.
Challenges for
Organic
Agriculture in
Australia:
Getting a ‘Fair
Go’
Amelie Bernzen
and Paul
Kristiansen
Australia Meta Analysis Most important
challenge that
limits the
production of
the organic
production of
agribusiness in
Australia is the
lack of
investment and
hence the
budget.
Impacts of
Climate Change,
Climate
Variability and
Management on
Soil and Water
Quality in
Wetlands of
South Australia
P. Shand , S.
Grocke, N.L.
Creeper, A.K
Baker,
Australia Meta Analysis The paper
presents the
scenario of
water soil
sediment in the
water bodies
that influences
the lives of the
fishes and the
other marine
lives that in turn
deteriorates the
quality of the
production.

Recommendations
Based on the study of the paper it is recommended to the government of Australia is to make
the agriculture more open to the foreign investment. That will increase the capital infusion
into the country and hence the technology can be used more for the production. This will
increase the production level and reduce the cost of production simultaneously increasing the
profit margin of the players. Apart from that, it is also recommended to the government to
provide subsidised form of transportation services so that the exported products of the
agriculture, fishery and the forestry can gain an added competitive advantage in the Asia
Pacific market. Recommendations are also given to the individual citizens of Australia as
well in the context of climate change so that they change their consumption habit to a greener
one. Lastly, the government can also focus on increasing the aggregate demand in the
economy so that there is a high demand for the goods and services within the economy of
Australia as well.
Conclusion
Therefore the paper finds out that agriculture, fishery and forestry sector is a crucial sector for
the Australian economy. This sector is interlinked with the all the other sectors that
influences the national product of the country. Therefore the government needs to be extra
careful about using this sector for catering economic growth rate of the Australian economy.
The paper also finds out that climate change can be major challenge for the selected
industries both directly and indirectly. In terms of the international trade relationship with
China, the climate change make Australian economy a winner, however in general this can
have a detrimental effect on the productivity of the resources as well. The paper also
furnishes literature review related to the topic of the paper and shows how the government
can use technology to boost the production in the agriculture sector thereby having a better
economic performance of the country.

Reference
Banwell, C., Dixon, J., Bambrick, H., Edwards, F. and Kjellstrom, T., 2018. The
sociocultural context of climate change adaptation in Australia, with a focus on hot weather.
In Health of People, Places and Planet: Reflections based on AJ (Tony) McMichael’s four
decades of contribution to epidemiological understanding. ANU Press.
Basto, M., Sathianathen, N., Te Marvelde, L., Ryan, S., Goad, J., Lawrentschuk, N., Costello,
A.J., Moon, D.A., Heriot, A.G., Butler, J. and Murphy, D.G., 2016. Patterns‐of‐care and
health economic analysis of robot‐assisted radical prostatectomy in the Australian public
health system. BJU international, 117(6), pp.930-939.
Beilin, R., Santhanam-Martin, M. and Sysak, T., 2019. Security and Climate Change in
Australia. Sustainable Solutions for Food Security: Combating Climate Change by
Adaptation, p.437.
Beilin, R., Santhanam-Martin, M. and Sysak, T., 2019. Vulnerability Amidst Plenty? Food
Security and Climate Change in Australia. In Sustainable Solutions for Food Security (pp.
437-457). Springer, Cham.
Gasparrini, A. and Vicedo-Cabrera, A.M., 2019. Temperature-related mortality and climate
change in Australia–Authors' reply. The Lancet Planetary Health, 3(3), pp.e122-e123.
Longden, T., 2019. Temperature-related mortality and climate change in Australia. The
Lancet Planetary Health, 3(3), p.e121.
Shezan, S.K.A., Das, N. and Mahmudul, H., 2017. Techno-economic analysis of a smart-grid
hybrid renewable energy system for Brisbane of Australia. Energy Procedia, 110, pp.340-
345.
Voyer, M., Barclay, K., McIlgorm, A. and Mazur, N., 2017. Connections or conflict? A
social and economic analysis of the interconnections between the professional fishing
industry, recreational fishing and marine tourism in coastal communities in NSW, Australia.
Marine Policy, 76, pp.114-121.

Appendix
1) Calculations of the Type I multipliers
Industry Cattle and Sheep Poultry and Other LivestockAgriculture, Forestry and Fishing Support ServicesCoal mining Oil and gas extraction
Cattle and Sheep 1.075555765 0.015788278 -4.26634E-05 -0.002545867 -0.001392864
Poultry and Other Livestock 0.002001798 1.008280166 -0.000209203 -0.000702384 -0.000424503
Agriculture, Forestry and Fishing Support Services 0.089087383 0.00942677 1.011365984 0.000538996 -0.000126479
Coal mining 2.10236E-05 8.36321E-05 -0.00010177 1.002215958 0.000751289
Oil and gas extraction 0.007722317 0.001758763 0.000819827 0.015253132 1.010205213
Meat and Meat product Manufacturing 0.003014078 0.002104451 -0.000831177 -0.002882999 -0.001566301
Grain Mill and Cereal Product Manufacturing 0.000353026 0.000526692 -1.7587E-05 -1.23389E-05 -8.28069E-05
Beer Manufacturing 0.000481493 3.2681E-05 0.00035805 4.22778E-05 -8.5842E-05
Clothing Manufacturing -0.001369559 -8.69791E-05 -0.000578011 -0.002207566 -0.002108354
Petroleum and Coal Product Manufacturing 0.026555198 0.008303022 0.004343666 0.085997549 0.0056536
Veterinary Pharmaceutical and Medicinal Product Manufacturing 0.033401658 0.004345776 0.000420891 -0.000156542 -7.30131E-05
Basic Chemical Manufacturing 0.049075583 0.004535776 0.009198144 0.001281241 -0.006625511
Specialised and other Machinery and Equipment Manufacturing -0.114470723 -0.015795728 -0.066870507 -0.460978319 -0.18878163
Electricity Generation -2.13399E-05 0.000938347 -0.001245283 -0.000670254 0.00887415
Water Supply, Sewerage and Drainage Services 0.013250409 0.008430339 -0.00317478 -0.02730251 -0.011527363
Heavy and Civil Engineering Construction 0.008965586 0.000581257 0.000265374 0.030663597 0.005360821
Construction Services 0.067041591 0.023313169 0.016007898 0.105825699 0.112669779
Retail Trade -0.00122927 -0.000166039 -0.001535572 -0.012684463 -0.005723718
Accommodation 0.001861074 0.00028744 -0.000174809 0.043172178 0.006826527
Food and Beverage Services -5.43561E-05 7.27841E-05 -0.002450296 -0.010465918 -0.004797072
Rail Transport 0.000911071 0.000268055 -0.000105348 0.060948388 0.00032016
Transport Support services and storage 0.020800491 0.000224422 -0.004207369 0.027294207 -0.004664373
Publishing (except Internet and Music Publishing) -0.001722195 -0.000206868 -0.001522045 -0.010862637 -0.004029945
Telecommunication Services -0.034071431 -0.00416977 -0.021523251 -0.162800833 -0.060299536
Finance 0.034072301 0.00874576 0.001706162 0.00648102 0.073892394
Auxiliary Finance and Insurance Services 0.027718888 0.003779703 -0.002540241 -0.026764647 0.02007031
Rental and Hiring Services (except Real Estate) -0.149732971 -0.018451846 -0.0892793 -0.690211622 -0.220579935
Professional, Scientific and Technical Services -0.074927425 -0.006516688 -0.068951901 -0.526292185 -0.234263851
Employment, Travel Agency and Other Administrative Services -0.0313903 -0.004311414 -0.029324621 -0.216569239 -0.080530078
Public Administration and Regulatory Services -0.007343142 -0.001010644 -0.00522958 -0.020121095 -0.008973683
Automotive Repair and Maintenance -0.016750337 -0.002332999 -0.0102884 -0.08020266 -0.029600917
Other Repair and Maintenance -0.000117727 -1.63586E-05 -7.16306E-05 -0.000527969 -0.00019996