Paths of adaptation to climate change in major Italian agricultural areas: Effectiveness and limits in supporting the profitability of farms

Climate change requires Mediterranean farms to maintain adequate profitability, while adapting to the increase in water needs of crops, the growth of water demand for non-agricultural users and the reduction of resource availability. We use discrete stochastic programming models of three Italian farming areas to simulate the adaptation paths of their farm types to changes in yields and irrigation needs of crops that climate change could generate at 2030. This is done in a context of progressive decrease of water availability. We condense the adaptation choices attributed by the optimization process to the farm types by means of indicators of value produced per water cubic meter and per hectare. We use those indicators in a quadratic regression analysis to explain the change in the hourly wages of family labour, which represents the farm resources’ profitability. The examination of the resulting elasticity indices outlines the adaptation paths impact on farm profitability. This integrated analysis of optimization models and econometric regression shows that the core of Italian cow milk production, based on medium-high intensity forage systems, adapts better. Instead, available technologies and structural features provide much narrower margins to livestock farms based on intensive forage production and, conversely, to more extensive livestock systems. Crop farms adapt by reducing labour use in less profitable activities, which boosts family hourly wages but increases unemployment. Furthermore, the surface of some crops can be expanded because their cycle takes place in months in which the availability of water decreases less and their irrigation requirement increases less; however, the low productivity of these crops does not allow to increase wages for family labour. The results on farms overall profitability derive from an integrated analysis of changes in water resources productivity, soil and labor. Mathematical programming outlines the adaptation paths that maximize farming incomes; the econometric analysis indicates whether those paths support profitability, favouring farm economic sustainability.