School of Agriculture, Food and Ecosystem Sciences - Theses
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ItemThe economic impact of climate change on perennial crops: the coconut industry in Sri Lanka and the value of adaptation strategies( 2016)Coconut is an important food crop in the Sri Lankan economy which utilises nearly 20 percent of its arable lands. This industry is shifting from an export orientation to a domestic industry; mainly due to the population-driven domestic demand and stagnating coconut production. Nearly 65 per cent of annual production is consumed domestically as fresh coconut, while the remaining 35 per cent is utilised by the processing sector for products including coconut oil, desiccated coconut and copra. Coconut production fluctuates with climate. This yield fluctuation has considerable impact on industry stakeholders due to inelastic supply of and demand for fresh coconuts. Government interventions are ad hoc and numerous. Further, the effectiveness of these strategies is questioned in the absence of a consistent analytical framework. This study developed an economic framework; an equilibrium displacement model for the Sri Lankan coconut industry which analyses the impact of different policy interventions. The model was tested for seven hypothetical scenarios of external shocks. The model was subsequently used to analyse the likely impact of climate change in this study. An analytic hierarchy process was used to estimate the biophysical impact of coconut yield under future climatic scenarios. Climate, soil and topography were the main considerations of the model. The outcomes of this model as yield changes were used as a supply shift in the economic model. The total change in economic benefits and distribution of these benefits were estimated to find out the magnitude of the economic shock and impact on different stakeholders. The findings show that the coconut industry in Sri Lanka will face a loss equivalent to 4,795 Rs.Million which is nearly 5 percent of the total value of the industry at equilibrium. The mostly affected stakeholders are wholesalers and domestic coconut consumers. Then the impact of different adaptation options and cost effectiveness were considered to address the impact of climate change. Among these yield increasing adaptation practices, irrigation during dry periods was promising the highest productivity levels. However, the investments were not cost effective for large scale irrigation systems and availability of a water source was a major concern. Fertilizer application and moisture conservation were also identified as cost effective practices that would offset the yield loss and provide extra gain. Development of a heat tolerant cultivar would be a long term sustainable solution with the observed and expected increase in maximum temperature. However, this may take several years and still worthy to invest on. The findings are useful in assessing potential future impacts and directing the industry policies.