ECON1064 Quantitative Analysis: Australian Economy Sectors Report

This report, prepared for ECON1064, quantitatively analyzes the impact of climate change on the agriculture, forestry, and fishing sectors of the Australian economy. It examines the significance of these sectors, highlighting their contributions to the Australian economy and trade balance. The report addresses the challenges posed by climate change, including its effects on production, exports, and trade relationships with countries like China. It calculates Type 1 multipliers to assess economic impacts, evaluates the effects of transport service cuts, and reviews relevant literature. The report concludes with recommendations for government action, emphasizing climate change mitigation, trade strategies, and sustainable practices to ensure the long-term viability of these vital industries. The analysis underscores the interconnectedness of these sectors and their vulnerability to environmental changes, advocating for proactive measures to safeguard the Australian economy.

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ECON1064 – QUANTITATIVE ANALYSIS

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Contents
Introduction................................................................................................................................3
Significance of agriculture, forestry and fishing services in Australian economy....................3
Challenges faced by these industries in Australia......................................................................3
Calculations of the Type 1 multipliers.......................................................................................5
Impacts of cuts of transport services..........................................................................................6
Impact of Climate change on China and its impact on Australia...............................................7
Impact of climate change on the Australia’s exports.................................................................7
Literature review........................................................................................................................7
Recommendations......................................................................................................................8
Conclusion..................................................................................................................................9
Reference..................................................................................................................................10

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Introduction
When it is about the consistent economic performance, Australian economy is one of the
economies of the world that are not missed. Australian economy has been so consistent in the
last few years that even the great financial crisis of 2007 failed to influence its operation
significantly. Behind this impressive feat are the different sectors of the Australian economy
which have been performing consistently over the years. Among them three of the most
important sectors are the agriculture, forestry and fishing. However, in the recent times due to
the climate change the equations have changed and there has been doubt regarding the
effectiveness of these sectors of the Australian economy. The objective of this paper is to
discuss the role of the sectors on the Australian economy and the challenges that is put
forward by the climate change comparing the case with that of China.
Significance of agriculture, forestry and fishing services in Australian economy
One of the unique feature of the Australian economy is that agriculture sector is linked with
different other parts of the economy. Therefore any kind of improvement in the performance
of the agriculture sector improves the national product by manifold. Around 17% of the
national workforce of the country is dependent on the agriculture sector. Although the
contribution of the agriculture sector to the Australian economy is mere 2.7% as per the data
of the 2019, it plays an important role stabilising the economy in times of turbulence .
Forestry is one of the sectors that help the country to improve its trade balance with the world
economies. The Australian economy has exported around $3 Billion worth of forest product
to the world. Other than that, production amounts to around $24 Billion employing a sizable
portion of the national workforce (Brouwer et al. 2018). Fishing industry is also another
sector that helps the economy to increase its export volume. A huge chunk of the production
of this industry is exported to Asia Pacific region. Therefore these industries keep on
performing well even when the domestic demand for the goods and the services are low.
Challenges faced by these industries in Australia
One of the major challenges faced by the agriculture industry of the country is the climate
change. Climate change changes the conditions for the production of the corps and the
vegetables in the country. Aggarwal et al. (2018) stated that quality of the production also
deteriorates with the change in the climate conditions. Therefore the agriculture industry of
Australia is losing its competitive edge over the rivals. The climate change that is affecting

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the agriculture is also affecting the forestry in Australia as well. Drought is among the major
reasons for the deforestation in the country. Other than that, lack of control of the government
is also another challenge that is creating problem for this industry. Australia was recently in
news for uncontrollable wild life that gravely affected the ecology of the forest (Kuznetsova,
Zagirova & Omarhanova, 2018). This also affects the production of this sector and hence the
export volume is often compromised. On the other hand one of the biggest challenges being
faced by the fisher industry is the illegal fishing that is affecting the stock of fish beyond the
level of extinction. Apart from that pollution in general is creating havoc for the marine lives
in Australia which is reducing the value of the production.

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Calculations of the Type 1 multipliers
M inverse Agriculture, Forestry and Fishing Support Services
-0.001415197
-0.000209195
-1.025074867
-0.000258187
-0.012558931
-0.000976479
-0.000299532
-0.001650953
-0.001864255
-0.021796342
-0.000648437
-0.028035087
-0.024015283
-0.002970245
-0.002768921
-0.000567663
-0.019042953
-0.004000852
-0.000592772
-0.002951198
-0.000168106
-0.005838043
-0.001023475
-0.005268891
-0.014159516
-0.012065179
-0.027037968
-0.051552062
-0.0114635
-0.001722056
-0.00655761
-0.017602018
Total -1.306155774
Table 1: The multiplier of I
(Source: Developed by the learner)
The result shows that the multiplier I of the agriculture, forestry and fishery is -1.3. That
means with 1$ increase in the sales the direct impact on the sector is of -1.3 dollars. The
negative sign in this case denotes the negative relationship between the variables.

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Another industry that is important for the agriculture, fishery and fishing industry is the
poultry and the other livestock as the demand sales in this industry does not reduce the
demand for the industry of agriculture, fishery and fishing industry. Apart from that
agriculture and livestock also works as an input to this industry as well and hence this
industry is important.
Impacts of cuts of transport services
Poultry and Other Livestock Transport Support services and storage
Cattle and Sheep -0.012385753 -0.001031309
Poultry and Other Livestock -0.85753462 -0.00035174
Agriculture, Forestry and Fishing Support Services -0.01060449 -0.000205921
Coal mining -0.000145142 -0.000445647
Oil and gas extraction -0.004958131 -0.005426226
Meat and Meat product Manufacturing -0.002086688 -0.001972028
Grain Mill and Cereal Product Manufacturing -0.000840155 -0.000211872
Beer Manufacturing -0.000134913 -0.00067375
Clothing Manufacturing -0.000251874 -0.000347849
Petroleum and Coal Product Manufacturing -0.009126593 -0.007277784
Veterinary Pharmaceutical and Medicinal Product Manufacturing -0.003496844 -4.22435E-05
Basic Chemical Manufacturing -0.004969332 -0.001926478
Specialised and other Machinery and Equipment Manufacturing -0.001385118 -0.002209539
Electricity Generation -0.001750098 -0.005649594
Water Supply, Sewerage and Drainage Services -0.008444262 -0.002913178
Heavy and Civil Engineering Construction -0.000305173 -0.016019526
Construction Services -0.013960871 -0.031693451
Retail Trade -0.000834244 -0.000773896
Accommodation -0.000334498 -0.001951544
Food and Beverage Services -0.000759337 -0.007206445
Rail Transport -0.000268936 -0.003560176
Transport Support services and storage -0.001539053 -0.840739705
Publishing (except Internet and Music Publishing) -0.000296283 -0.002630003
Telecommunication Services -0.001356959 -0.01861766
Finance -0.006483132 -0.040039714
Auxiliary Finance and Insurance Services -0.004903099 -0.024753074
Rental and Hiring Services (except Real Estate) -0.003698242 -0.020268941
Professional, Scientific and Technical Services -0.013502714 -0.078783461
Employment, Travel Agency and Other Administrative Services -0.002808133 -0.076294
Public Administration and Regulatory Services -0.000272225 -0.008204284
Automotive Repair and Maintenance -0.00057044 -0.004691098
Other Repair and Maintenance -0.002171604 -0.01757249
Total -0.972178955 -1.224484628
Figure 2: The changes in the budget
(Source: Developed by the learner)
The analysis finds out that when the external demands and budget are cut by the government
for these two sector the input dependency increases. As a result the cost of production in the
industry will increase leading to a lower output for agriculture, forestry and fishery industry.

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Impact of Climate change on China and its impact on Australia
One of the major impact of the climate changes in on the agriculture sector of the Chinese
economy. With the changes in the climate conditions, the quality of the product and the
volume of the production reduce over the time (Ingrao et al. 2018). China as an importer of
inputs to the agriculture from Australia reduces its demand from Australia. This indirectly
impacts the trade between the two countries and the production facilities in Australia. Apart
from that the climate change can also influence the demand of the customers as well (Newell
& Taylor, 2018). For example if the weather becomes hot the demand for cattle and meat
reduces that are imported from Australia. Therefore the production of cattle and meat slumps
in Australia leading to an indirect problem in the country due to the climate change.
Therefore in this, both Australia and China will be losers as these countries are related with
each other in terms of the trade.
Impact of climate change on the Australia’s exports
As discussed above, the economy of Australia depends heavily on agribusiness and export of
these products to the other countries. Therefore, the climate change reduces the demand for
the products of this industry both directly and indirectly. The climate change can reduce the
population of marine lives in the water leading to a lower production and higher prices
leading to a lower demand (Luo et al. 2019). Other than that the climate change also can alter
the preferences of the customers leading to poor revenue for the industry. However, the
individual Australians can use energy sources wisely so that it does not degrade the
environment and cater the climate change. Apart from that the individual Australians can also
reduce their consumption of non renewable resources so that it does not put pressure on the
environmental capacity (Bracco et al. 2018). Get themselves aware with the climate change
their choices accordingly so that it does not harm the environmental balance any further. This
actions from the side of the Australians would reduce the direct impact of the climate change
on the economy where it can create its own demand.
Literature review
Name of the
study
Author Country Methods Main findings
Private Sector
Actions to
Valorise Public
Floor Brouwer
Francesco
Mantino Nico
Germany Meta Analysis The private
sector plays an
important role in

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Benefits from
Agriculture and
Forestry
Polman Chris
Short Simone
Sterly Ilona Rac
catering the
growth rate of
the agriculture,
fishery and
Forestry
industry.
Achieving the
Mid-Century
Strategy Goals
for Deep
Decarbonization
in Agriculture
and Forestry
Aashna
Aggarwal,
Danielle
Arostegui,
Kendall
DeLyser,
Bethany
Hewett,
Emily Johnson,
and Alexander
Rudee
England Input and output
analysis
The paper finds
out that financial
incentives play a
huge role in
keeping the
climate change
that further
influences the
production of
agriculture,
forestry and
fishery industry.
Recommendations
Based on the study it is recommended to the government to implement climate change
measure and increase the awareness among the people of the country. That would make the
industry more sustainable to the changes and hence it will have a better return in the long run.
Apart from that it is also recommended to government to have forward pricing contract with
the foreign countries so that the changes in their economy do not influence the performance
of the Australian economy in the short run. This will provide the government time to take the
contingency plan when sloppy economic performance is evident from the side of the trade
partner. Furthermore, the government of the country is recommended to reduce the
transpiration by at least 30% in order to boost the agriculture, forestry and fishery industry as
transpiration is an important part of the industry. Lastly, the government is recommended to
look into illegal fishing meticulously so that the production can be kept at a sustainable level
without affecting the renewable resource.

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Conclusion
Therefore the paper finds out that, agriculture, forestry and fishery industry plays an
important part in the Australian economy as it interconnects different industries of the
country. Therefore any boost in this industry can be passed on to the other industry resulting
in a better economic growth rate for the country as a whole. Agriculture, forestry and fishery
industry faces various challenges that include illegal operations, climate change where the
government needs to step in. The changes that the government makes in other significant
industries which are related to agriculture, forestry and fishery industry can lead to a low
production. The analysis also finds out that China, economy on which Australian economy
depends a lot can provide an indirect effect of the climate change and hence requires the
government to have a contingency plan.

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Reference
Aggarwal, A., Arostegui, D., DeLyser, K., Hewett, B., Johnson, E., & Rudee, A.
(2018). Achieving the mid-century strategy goals for deep decarbonization in
agriculture and forestry. Working Paper. Nicholas Institute for Environmental Policy
Solutions.
Bracco, S., Calicioglu, O., Gomez San Juan, M., & Flammini, A. (2018). Assessing the
contribution of bioeconomy to the total economy: A review of national
frameworks. Sustainability, 10(6), 1698.
Brouwer, F., Mantino, F., Polman, N., Short, C., Sterly, S., & Rac, I. (2018). Private sector
actions to valorise public benefits from agriculture and forestry. EuroChoices, 17(3),
16-22.
Ingrao, C., Bacenetti, J., Bezama, A., Blok, V., Goglio, P., Koukios, E. G., ... & Huisingh, D.
(2018). The potential roles of bio-economy in the transition to equitable, sustainable,
post fossil-carbon societies: Findings from this virtual special issue. Journal of
cleaner production, 204, 471-488.
Kuznetsova, A. R., Zagirova, Z., & Omarhanova, Z. (2018). Problems of poverty and
motivation of workers to labour in the field of agriculture as effects of stagnant
economy. In Hradec Economic Days (pp. 523-538).
Luo, L., Zhou, Y., Li, Q., & Mao, A. (2019, August). Study on Intrinsic Factors Affecting
Production Technology of Low Carbon Agriculture and Forestry Plants. In IOP
Conference Series: Earth and Environmental Science (Vol. 310, No. 5, p. 052015).
IOP Publishing.
Newell, P., & Taylor, O. (2018). Contested landscapes: the global political economy of
climate-smart agriculture. The journal of peasant studies, 45(1), 108-129.