Abstract: Highlights • A framework to study climate and policy uncertainty in agriculture is presented. • Combining both sources of uncertainty has ambiguous effects on agriculture. • Uncertainty needs to be highlighted in modelling tools for policy analysis. Abstract Farmers are exposed to climate change and uncertainty about how that change will develop. As farm incomes, in Norway and elsewhere, greatly depend on government subsidies, the risk of a policy change constitutes an additional uncertainty source. Hence, climate and policy uncertainty could substantially impact agricultural production and farm income. However, these sources of uncertainty have, so far, rarely been combined in food production analyses. The aim of this study was to determine the effects of a combination of policy and climate uncertainty on agricultural production, land use, and social welfare in Norway. Output yield distributions of spring wheat and timothy, a major forage grass, from simulations with the weather-driven crop models, CSM-CERES-Wheat and, LINGRA, were processed in the a stochastic version Jordmod, a price-endogenous spatial economic sector model of the Norwegian agriculture. To account for potential effects of climate uncertainty within a given future greenhouse gas emission scenario on farm profitability, effects on conditions that represented the projected climate for 2050 under the emission scenario A1B from the 4th assessment report of the Intergovernmental Panel on Climate Change and four Global Climate Models (GCM) was investigated. The uncertainty about the level of payment rates at the time farmers make their management decisions was handled by varying the distribution of payment rates applied in the Jordmod model. These changes were based on the change in the overall level of agricultural support in the past. Three uncertainty scenarios were developed and tested: one with climate change uncertainty, another with payment rate uncertainty, and a third where both types of uncertainty were combined. The three scenarios were compared with results from a deterministic scenario where crop yields and payment rates were constant. Climate change resulted in on average 9% lower cereal production, unchanged grass production and more volatile crop yield as well as 4% higher farm incomes on average compared to the deterministic scenario. The scenario with a combination of climate change and policy uncertainty increased the mean farm income more than a scenario with only one source of uncertainty. On the other hand, land use and farm labour were negatively affected under these conditions compared to the deterministic case. Highlighting the potential influence of climate change and policy uncertainty on the performance of the farm sector our results underline the potential error in neglecting either of these two uncertainties in studies of agricultural production, land use and welfare.

Abstract: • This study combines crop, livestock and economic models.
• Models interaction is through use of relevant input and output variables.
• Future climate change will result in increased grass and wheat dry matter yields.
• Changes in grass, wheat and milk yields in future reduce farm emissions intensity.
• Changes in future dry matter yields and emissions lead to increased profitability.
There is a scientific consensus that the future climate change will affect grass and crop dry matter (DM) yields. Such yield changes may entail alterations to farm management practices to fulfill the feed requirements and reduce the farm greenhouse gas (GHG) emissions from dairy farms. While a large number of studies have focused on the impacts of projected climate change on a single farm output (e.g. GHG emissions or economic performance), several attempts have been made to combine bio-economic systems models with GHG accounting frameworks. In this study, we aimed to determine the physical impacts of future climate scenarios on grass and wheat DM yields, and demonstrate the effects such changes in future feed supply may have on farm GHG emissions and decision-making processes. For this purpose, we combined four models: BASGRA and CSM-CERES-Wheat models for simulating forage grass DM and wheat DM grain yields respectively; HolosNor for estimating the farm GHG emissions; and JORDMOD for calculating the impacts of changes in the climate and management on land use and farm economics. Four locations, with varying climate and soil conditions were included in the study: south-east Norway, south-west Norway, central Norway and northern Norway. Simulations were carried out for baseline (1961–1990) and future (2046–2065) climate conditions (projections based on two global climate models and the Special Report on Emissions Scenarios (SRES) A1B GHG emission scenario), and for production conditions with and without a milk quota. The GHG emissions intensities (kilogram carbon dioxide equivalent: kgCO2e emissions per kg fat and protein corrected milk: FPCM) varied between 0.8 kg and 1.23 kg CO2e (kg FPCM)− 1, with the lowest and highest emissions found in central Norway and south-east Norway, respectively. Emission intensities were generally lower under future compared to baseline conditions due mainly to higher future milk yields and to some extent to higher crop yields. The median seasonal above-ground timothy grass yield varied between 11,000 kg and 16,000 kg DM ha− 1 and was higher in all projected future climate conditions than in the baseline. The spring wheat grain DM yields simulated for the same weather conditions within each climate projection varied between 2200 kg and 6800 kg DM ha− 1. Similarly, the farm profitability as expressed by total national land rents varied between 1900 million Norwegian krone (NOK) for median yields under baseline climate conditions up to 3900 million NOK for median yield under future projected climate conditions.