Agricultural Risk Demonstrator

In a nutshell  

• Climate change poses growing risks to agriculture, food security and price stability. This use case develops a demonstrator that quantifies climate risk to agriculture for the use of the European Central Bank (ECB).
• This use case co-designs indicators and scenarios that examine how compound climate extremes could affect crop yields and food prices under current and future levels of global warming.  
• It combines high-resolution land-use and crop maps with the Climate Change Adaptation Digital Twin (Climate DT) data to provide detailed insights into risks across major food groups.  

Technical Overview 

• Use case Topic: Agriculture 

• Policy addressed: Climate Adaptation 

• Providers: Climate Analytics & Barcelona Supercomputing Center 

 

Challenge  

Climate risks to the agriculture sector are relevant to price stability.  

Food prices have emerged as a significant means by which extreme weather conditions like heat, drought, and intense precipitation can affect macro-financial stability, as reduced yields and supply shocks push prices up.  

DestinE Solution  

The demonstrator is informed by recent developments in modelling the economic impacts of climate change. Climate Analytics and Barcelona Supercomputing Center work closely with ECMWF, combining scientific development with co-design and knowledge exchange. This approach will help ensure that the demonstrator responds to users’ needs and produces information that is relevant to the ECB’s work.  

The Demonstrator develops a set of climate risk indicators tailored to the ECB’s needs. The indicators will capture both climatic hazards and agricultural vulnerability. They will cover individual hazards, such as heat stress or drought, as well as compound events in which several hazards occur together. By combining these indicators with high-resolution data on where crops are grown, Climate DT simulations will be used to provide detailed insights into agricultural exposure. The Demonstrator will also use trade data to assess how weather extremes outside Europe could disrupt the EU’s food supply and affect prices. Finally, the metrics will be validated by conducting an econometric analysis to determine their impact on EU food prices.  

Impact 

The Agricultural Risk Demonstrator will develop a set of climate risk scenarios using storyline simulations of the Climate DT. These simulations can reconstruct extreme weather events under past, present, and future climate conditions. The demonstrator will create highly relevant and physically plausible scenarios for the ECB with storyline simulations.  

1. The first scenario will focus on recent high-impact compound events in Europe, like the European compound heat and drought of 2022, which increased olive oil prices by 50% in subsequent years, amongst other effects. Other compound events may be considered based on stakeholder priorities.  

2. The second scenario will explore the risks posed by teleconnected anomalous climate events abroad and their resulting impacts transmitted through trade networks. We propose analysing the teleconnected heatwaves of 2018, which affected multiple breadbasket regions and impacted food prices in Europe.  

These scenarios will be complemented by calculating the climate risk indicators for a historical baseline scenario and a forward-looking scenario up to 2050 to allow for quantifying the development of risks over time. Together, these will provide a comprehensive agro-financial risk profile for Europe, capturing both compound and teleconnected effects.  

The Demonstrator will quantify the uncertainties in the Climate DT simulations and evaluate them against observational and reanalysis data such as ERA5, and against CMIP6-based data, so that the risk estimates carry a clear statement of confidence.