Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue 14 - Evidence - March 25, 2003
OTTAWA, Tuesday, March 25, 2003
The Standing Senate Committee on Agriculture and Forestry met this day at 5:35 p.m. to examine the impact of climate change on Canada's agriculture, forests and rural communities and the potential adaptation options focusing on primary production, practices, technologies, ecosystems and other related areas.
[English]
Ms. Keli Hogan, Clerk of the Committee: Honourable senators, as clerk of this committee, I must inform you of the unavoidable absence of the Chair.
Pursuant to the Rules of the Senate, I will now preside over the election of an acting chairman. I am prepared to accept motions.
Senator LaPierre: I move that Senator Gustafson take the Chair.
Ms. Hogan: It was moved by Senator LaPierre that Senator Gustafson be elected as acting chairman of this committee. It is your pleasure, honourable senators, to adopt the motion?
Hon. Senators: Agreed.
Ms. Hogan: I invite Senator Gustafson to take the chair.
Senator Leonard J. Gustafson (Acting Chairman) in the Chair.
The Acting Chairman: Honourable senators, we have with us today Professor Robert Mendelsohn from the Yale School of Forestry and Environmental Studies. He is a natural resources economist and has developed several models that have been used to measure the effect of climate change on agriculture and forestry.
We also have with us Mr. John Reilly, Associate Director of Research in the joint programs on science and policy of global change from the Massachusetts Institute of Technology.
I welcome you here today, gentlemen. Please proceed, Professor Mendelsohn.
Mr. Robert Mendelsohn, Professor, Yale University: Mr. Chairman, it is an honour to be invited to appear before this committee.
I would like to talk today about the effects of climate change on Canada. The expertise that I bring to this meeting is the following. I have led a number of studies on the impacts of climate change in the United States. We have looked at both agriculture and forestry. We have also done some agricultural studies in other countries, in particular countries toward the low latitudes such as Brazil and India. As well, we have done a forestry study of the entire world. Of course, Canada plays a big role in that.
We have had some experience with Canada, although much of what I have to say today comes from learning a great deal about the United States, that country to the south of here.
One of the things we think is true is that climate change will have effects on Canada. There will be three kinds of effects. In agriculture and forestry, there will be a change in productive area and a change in productivity. There will also be changes in the rest of the world. The effects in the rest of the world will affect global prices. Those prices will have a third effect on Canada.
I wish to talk about each of these in turn for both agriculture and forestry.
In the Canadian farming area, we expect that there will be an increase in the amount of available land for farming. You will see more of the land in the places you currently farm become suitable for farming. With warming, the area that you will be able to farm will expand.
The reason we guess that is because when we did studies of different regions in the United States one of the things we saw was that all the northern regions that border your southern border expanded. They all had huge agricultural benefits as a result of climate change. We have every reason to expect that that will apply even more so to Canada.
We have learned is that there seems to be in agriculture and forestry a kind of hill-shaped relationship between how well those sectors do and temperature. In agriculture, we think that optimal temperature — the top of the hill — is something close to the middle of the United States, our Midwest. With forestry, we think the top of the hill might be in the subtropics, south of the United States.
That means that currently, Canada is suffering from being too cold. At least, you might look at it that way. You are not endowed with enough warming. One of the things we expect to be true is that Canada lies to the left of the hill in both sectors. With warming, we are expecting Canada to climb that hill. Even though the world may not be a beneficiary, Canada will be a beneficiary of warming. This will also be applied to other polar countries like Canada.
We expect the same thing to be true in forestry. When we look at ecological models, they suggest there will be a dramatic increase in the boreal forest. It will go far north into the tundra. You will see a dramatic increase in forest area in Canada, most of which will not be accessible. That is to say, it will not be commercially viable. What will happen is that a vast Canadian wilderness that does not yet exist will be created. Commercial forests are also expected to expand, but not nearly as much as your overall forest area will. We expect to see more eastern softwoods and more boreal forest.
In terms of productivity, there are different things that climate change will do. We believe the warming part of climate change will increase the productivity per hectare. There is also little question that you will get increased yields from carbon fertilization, from the higher carbon dioxides levels in the atmosphere, which is good for plants, trees and crops.
What is not well understood is what will happen to precipitation. The climate change models are having a hard time predicting what will happen to precipitation in every region. They believe precipitation will increase in the planet as a whole, but they do not know exactly how that will be distributed from region to region. Some of the models predict there will be drying in Canada, while some predict Canada will get much wetter. Obviously, the wetter Canada gets, especially in the centre of the continent, the more productive it will be.
Another thing not well understood is what will happen to the interannual variation — the variation of weather from year to year. As you know, you currently suffer from interannual weather variation, especially in the mid-continent region. You get these intermittent years of great dryness that result in bad crop yields, bad forestry and lots of forest fires. This is characteristic of the climate in the mid-continent that has been here for a long time. This has been part of Canada long before climate change. What climate scientists do not know is whether it will get worse, better or stay the same. Again, this is a factor we do not fully understand. More variation is clearly a bad thing. We are not absolutely certain which way it will turn.
In forest productivity, we get the exact same results. We believe that productivity per hectare will increase because of warming. If your forests were warmer, we believe they will be more productive. They are now limited by the growing season. Carbon fertilization is also expected to improve how well they work, although it is not clear whether it will be as powerful as with the crops.
Again, we do not know what the precipitation will do or what effects the interannual variation will have. It is the same story as with the crops.
As to what will happen worldwide, when we look at forestry we are convinced that a warmer, wetter, CO2-enriched world is good for forests. Forests will grow in more places than they grew before, and they will grow faster. We are expecting that climate change will cause the price of all wood products to fall. That has a potentially deleterious effect on Canadian producers. On the other hand, it will be a good thing for Canadian consumers.
That same phenomenon is true in agriculture. However, we are less confident about the magnitude of that fall. We are less certain that world production will go up dramatically resulting in world prices falling. However, this same kind of phenomenon is possible.
In the forestry models, in addition to the fact that climate is uncertain as to exactly how much warming we will have, another uncertainty is how forest systems will react. There are two hypotheses amongst ecologists as to how systems will react. The first is, as they change, as there is a shift from one type of forest to another, everything will die in its place. This is a phenomenon called ``dieback.'' If that happens, much of the inventory will be lost in the transition of warming. As you go from our current situation to what we envisage in 100 years, it is possible that much of the inventory will be lost in the process through this dieback phenomenon.
The second possibility is that that will not occur. Instead, regeneration will cause new types of forests to grow and you will not ever see this dieback effect. If you get a regeneration scenario, it turns out that the world in general will do better — that is, world production will go up, but in particular, it will have a big effect on Canada.
We think global prices will fall because of warming. We are more confident about that in timber. In agriculture, it would depend on how severe the climate change scenario is. Prices will fall less in the dieback case because you will lose the inventory.
In summary, agriculture production and forest production are likely to increase in Canada. What will happen to farmers and foresters to some degree will depend somewhat on how global prices change and how much they change; that is, how much other countries experience benefits or losses.
We expect that what is good for Canada is not good for countries further south of the United States. What will happen in the world overall, is somewhat ambiguous. There will be large improvements in the polar countries such as Canada. There are likely to be improvements in mid-latitude and temperate countries, unless it gets extremely hot, in which case they too will suffer damages. We are expecting nothing but damages in the low-latitude countries. The developing countries near the equator will be hurt by climate change. The effects across regions offset each other.
It is likely that the consumers of wood products will benefit. It is a curiosity in climate change that even people in the cities will be affected by what happens in these sectors because of price changes.
In regard to farm impacts, we saw increases in productivity in the northern regions of the United States of something like 16 per cent to 50 per cent with a 2.5-degree change and minus 12 per cent to plus 50 per cent with a 5- degree change. We see huge ranges in those changes depending on what happens to precipitation. In low precipitation cases and some warming, you will see some damages, even in the north. If you have a significant amount of precipitation, or if you have a normal increase in precipitation that we are expecting and warming, we are expecting benefits and they can potentially be big.
The estimate we have made for Canada is near $7 billion of benefits a year in both 2.5- and 5-degree scenarios. We are expecting to see fairly large benefits in the agricultural sector for Canada.
Forestry will depend on two things; the first is the climate scenario. The first scenario is called the ``Hamburg'' scenario, because the Hamburg climate modellers devised that model. The other is the ``Schlesinger'' model, which was devised by Professor Schlesinger. The Schlesinger model is better for Canada than the Hamburg model because it gives Canada more warming relative to the rest of the world. One of the funny things about these global effects is that it is not just that there will be warming, it is how much warming there will be relative to other parts of the world. Some of the models provide for a significant amount of warming and others make the warming more even across both the north and the low latitudes. The scenarios that show a large amount of warming give huge benefits; therefore, they show up in the forestry model.
The other thing that is different is whether there is regeneration or dieback. If the dieback occurs, many forests will be lost in Canada in the dieback process. The dieback process could include dramatic forest fires or insect attacks. Ecologists are full of dire predictions. However, if they occur, what will happen to forest owners and suppliers are small benefits or possibly even losses. Consumers will see nothing but benefits.
Forestry will be a benefit to Canada regardless of the scenario. Clearly, there will be a much bigger benefit in the scenarios where you keep your forests and do not lose them.
Senator LaPierre: Would you explain what a dieback is?
Mr. Mendelsohn: What will happen with warming, according to ecological models, is that forest types will shift from the equator northward. All the forest types will gradually push toward the poles. What that means is that eastern forests currently in the United States will push into the boreal forest and the boreal forest in turn will push into the tundra. All the systems will be pushed up toward the North pole.
Senator LaPierre: Is that a positive?
Mr. Mendelsohn: That is a positive thing from the point of view of forestry. There are two ways they might change. The first is that, just as they are about to change, all the existing forests will decay rapidly. They might go up in a gigantic fire or they may become vulnerable. What the models expect is that the climate pressure will be greater for the forests to burn up. What the models suggest is that you might actually lose the forests quickly in a series of large fires in dry years. That is the dieback scenario.
If dieback occurs, it lowers Canadian benefits. Many of your forests are vulnerable to this phenomenon. In all cases, there will be large benefits for consumers. On an annual basis, we are talking about something like $0.5 billion to $3 billion. The forestry effects are smaller than the agricultural effects.
In summary, Canada is likely to benefit from warming. Some aspects of warming that will be harmful to Canada as a whole in other economic sectors — possibly some of the water sector phenomenon. In general, looking at agriculture, forestry or energy, we are expecting large benefits for Canada in those sectors.
There is also the question of sequestration. Canada has an opportunity to sequester carbon in forests. There is also an opportunity to sequester carbon in agriculture lands, however, I will not address that question today. In regard to forests, there is a chance to put away at least 0.75 billion tons by 2050 and 2 million tons by 2100 if they gave incentives to forest owners to sequester carbon.
We have examined the idea that the government would ``rent'' additional carbon. Any time a forester increased the amount of carbon on his land, you would pay him a rent for that and they would get that rent as long as that carbon exists on the land. If they cut the trees down and the carbon disappeared, the rents would go back to zero. If you did something like that, and you provided rents similar to what we think the carbon is worth from a global warming perspective, you would get that kind of sequestration.
There is a large potential for sequestration. You do that in practice by lengthening rotations and reducing fires. That is the practice that you would follow to try to obtain more carbon here.
Warming will increase forest area. Warming will cause carbon sequestration to occur in Canada even if nothing was done.
One of the other questions is adaptation; that is, what should Canada do to adapt? Most of the adaptations we have in mind are things that would be in the self-interest of a farmer or forester to do anyway. One of the things that the analysis suggests is that in some ways you want to free markets to adapt to climate. That is, you want to be farmers to be sensitive to how climate is changing. In this case, we expect the changes in climate to be beneficial and you want the farmers to increase their productivity. You want them to expand their farms and be open to this. You want to keep flexibility in your system and keep decision-making decentralized. Only if you do that will the adaptations we expect that will happen naturally still occur. This is a very important lesson.
In the farm cases, that entails allowing farmers to make adjustments as they see fit and, as they see the climate changing, allowing them to make those changes. In the forest concessions, it means ensuring that the concession agreements are not written so rigidly that if conditions change in the future, the concessionaires could not do different things than they do today. Decade to decade, you want the agreements you have with foresters such that they can make adjustments.
There is one last thing, namely, research. These studies have been done in the United States. They do not have to be expensive, but to my knowledge, they have never been done in Canada. I strongly recommend that you get people to study agriculture and forestry here so that you are confident, as I give this advice, that your Canadian experts would also agree that this is what they think would happen.
The Acting Chairman: Thank you, Professor Mendelsohn. We will have a few questions.
Senator Chalifoux: We have been hearing a lot of presentations and we have been studying climate change in Canada for many years. I live in the northern central part of Alberta. You know where that is, I hope?
Mr. Mendelsohn: Yes. I did some things in your neighbouring province, Saskatchewan.
Senator Chalifoux: Yes, I see you are with Weyerhaeuser.
Mr. Mendelsohn: In a sense, yes. Weyerhaeuser has been a friend to the Yale School of Forestry.
Senator Chalifoux: Where I live, we have been suffering severe drought for more than three years now. I am worried my well will run dry. We had our second or third brown Christmas this year. We did have some snow and, thank goodness, there is some snow in the mountains now. The drought is so bad that they cannot grow canola. Senator Gustafson will elaborate on that because he is a farmer down there, whereas I live in a farming area. It is serious. In forestry, the fires are unbelievable. We have the infestation of a lot of the insects that are destroying the trees, especially the pine. It has been happening for several years.
In the other presentations that we have heard, we heard that Alberta and part of Saskatchewan will end up as desert. We have desert in Alberta anyway, in the southern part. It is an arid part of the country. However, it will be going north. I have noticed that. I am a child of the ``dirty thirties.'' For the first time in my life, last year, when I was driving from Alberta to Saskatchewan and through to Manitoba, I saw alkali wind storms, where the lakes had totally dried up and there were huge white clouds going up. I never saw that in the dirty thirties. It is very serious.
Have you been in touch with any of our researchers up here? Have you been in touch with any of our universities that have been studying this for a long time?
Mr. Mendelsohn: I have been in touch with some of the people from the Canadian climate community. I was willing to come today because I was concerned that they all tended to be very pessimistic people. Every one of them tells a story that this will be bad for Canada. You are right, there could be scenarios that are bad for Canada. I was trying to make that clear — namely, that it is possible that there could be some bad things happening in relation precipitation that would be bad for parts of Canada. That could happen.
However, if you look at all the climate models, only a few say that will happen. That is actually a low-probability event. It is not certain to happen. Some of the models are actually predicting that there will be a vast increase in the amount of precipitation in Canada. Precipitation is one of those elements that is uncertain. I wanted to make clear to you that, although that is possible and that story would be harmful, it is not likely.
Senator Chalifoux: I do not see it being harmful. We must be prepared for anything so that we can change our habits. Instead of growing wheat, or something, we can look at the adaptation of our crops and that sort of thing.
We import a lot of fruit and vegetables from California. How will this global warming affect California?
Mr. Mendelsohn: We just finished studying California. It is also potentially vulnerable to dry scenarios, mostly because they have such a vast growing population and limited water supply. They were curious what they would do in the future, even without climate change. They were worried about a climate change that was dry. They found that they would have to drop irrigation of some of the low-value crops that they currently irrigate such as alfalfa and rice. If they gave those up, they had plenty of water left for the most valuable crops — the crops that you purchase from California, namely, the nuts, fruits and vegetables. In fact, the actual damages to the state can be limited, if they were to reallocate their water across their users.
Senator Chalifoux: I am curious about the effects on wildlife habitat. I am an Aboriginal person. We depend a great deal on trapping, on hunting and on fishing. The pollution is terrible. It is affecting everything. Have you done studies on the effects on habitat within forestry?
Mr. Mendelsohn: Your instincts are perfect. There are two possibilities: Warming could hurt the animals themselves or it could affect the habitat. We found that most of the animals are fairly robust against the climate itself and will hardly be affected. However, they are dependent on the habitat. As the habitat changes, the animals will change. The scenario that the ecologists are predicting for Canada — which is that your forests are likely to increase and expand to the north — suggests there will be vastly more habitat than there was before.
Senator Chalifoux: What we have found in the North, in the Arctic, is that the global warming is affecting us so badly that the polar bears are starving, that the whole change is taking place already, and that it is affecting the fish, the walrus, the seal and everything in the North. At home, I found that some of our birds never left to go south. In the last three weeks, I have found that the rabbits are starting to go brown already, which indicates that it is an early spring. A lot of things are happening now that did not happen right now and waited until April. We are about three weeks to a month ahead of everything.
Mr. Mendelsohn: You are a cunning observer. Most people in the United States think they have seen climate change, but they are mistaken. The changes you are talking about are the kinds of things that scientists confirm. This is what the models suspect would happen, namely, that as you move closer to the poles, that is where the warming will be the greatest. It is precisely the place where you expect to see changes first. You are seeing climate changes.
Senator Chalifoux: Eventually, then, we can export tomatoes, cucumbers, and everything, to California?
Mr. Mendelsohn: Maybe.
The Acting Chairman: Honourable senators, we will now go to our next witness. Dr. John Reilly, will you make your presentation, please?
Mr. John Reilly, Associate Director of Research, Massachusetts Institute of Technology: I appreciate the opportunity to be here and hope I can be of some help. I have not done specific studies of Canada in the past. I have done some global studies in which Canada was involved, however.
More of my work has been on agriculture in the United States and the U.S. National Assessment of Climate Variability and Change, where I was co-chair of that activity. I thought I would talk about that and show you some of the results from that work and then address, to the extent we have thought about it, how you would adapt to climate change and some of the suggestions that come out of that. I will focus my remarks on that today and then be happy to answer your questions.
Professor Mendelsohn has spoken to some of these issues. The first question we have to ask is whether climate change will be beneficial or detrimental. Climate change can be detrimental in terms of its effect on productivity but agriculture is wrapped in international markets. Even if it is somewhat detrimental to productivity in Canada, if it is more detrimental in much of the rest of the world, then Canadian farmers can gain. Exports will be up and many farmers in Canada will benefit from climate change.
On the other hand, in cases where climate change is beneficial to much of the world, then farmers will not benefit with falling prices. That will benefit the consumers. Falling crop prices are not necessarily good for farmers. If crop prices fall worldwide, it could be harmful to the farm community because they would have to sell at lower prices. However, it depends on the relative productivity changes in Canada versus the rest of the world. Of course, Canada is a huge exporter and so what happens to world prices tends to dominate the economic impact on Canada.
One confusing part of the climate change issue is the time scale. Many of the studies that we look at involve what would happen as a result of climate change 50 or 100 years into the future. That is an interesting result but it does not necessarily apply if you are thinking about what to do today or what to do about it now. Agricultural planning horizons and even infrastructure planning horizons are on the order of a few years. Even infrastructure decisions might be on the order of 20 to 30 years. The time horizon of forecasts is not consistent with the decisions that one would want to make to adapt today.
There is the issue of trying to distinguish between a persistent trend of gradual warming versus variability — changes in the warming from one year to the next or in precipitation. Even if the average climate were to not change at all and things were more variable so that in one year you had a great deal of rain and the next year there was a drought, that could be disastrous all the time. The climate models are poor at predicting variability, particularly for precipitation. What will happen in that respect is not well known.
Often many of the agricultural studies have focused exclusively on what happens on the farm or in farm markets. In our U.S. national assessment, we try to look beyond the farm gate at what happens to the resources and pollution. Then, we think about transportation and communities. When we had the drought in the Mississippi River Valley, one of the surprises that people had not thought of was that barges would be stranded up and down the river. These kinds of things happen and need to be considered. If you had much more precipitation, then you would need to think about flooding. The newer climate scenarios have a great deal of precipitation and so flooding is a possibility.
We observe trends in historical data and we are trying to mesh these with predicted changes. We can see the observed trends well but the question is whether we should react to the observed trends or try to predict ahead. We would like to be able to predict ahead but that raises the question: What is our accuracy to predict ahead? Those are some of the difficult issues of thinking about adaptation and about trying to put some of those completed studies into context.
This slide shows an example of an issue in variability. You can see, on the left side, six or seven global climate models prediction of global precipitation anomalies — the change in precipitation going from roughly the years 1850 to 2100. On the right side of the slide, you will see those same models' prediction for anomalies in the United States. You can see a much more variable story for the United States, although it looks like smooth change for the rest of the world. However, as you focus on a specific area, you tend to see a greater variability. That is one of the difficulties in predicting what may occur.
I would also point out that you see inter-decadal variability of a large extent. The two models we worked with on the national assessment are the ones that show the black line on the right in the United States, which is the Canadian climate model. The red line is the Hadley Centre model in the U.K. We picked out two periods to look at: the decades of the 2030s and the decades of the 2090s. You will see that the Canadian climate model, coincidently, has low precipitation in that 2030 decade. That turned out to be a droughty decade for the United States. Then, precipitation recovers and it is wet by the end of the century. Therefore, you may not see an even trend. There may be a decade or two of drought and then precipitation may increase.
The Hadley Centre model shows somewhat the opposite, with large precipitation increases coincidently at the end of the century — that red line — and at the 2030 mark, but there is somewhat less in between those times. Generally, it is a much wetter scenario for the United States.
You can see that is generally true for the world but the Hadley model, which is the wettest for the United States, is not necessarily the wettest for the globe. The ECHAM model is somewhat wetter for the globe. This regional picture, if you look into anything narrow, is more difficult to sort out.
I must apologize that I have not done studies of Canada specifically. However, we have done some detailed studies for the United States that look at how regional production might change under the Canadian climate model and the Hadley Centre model. That provides us with a picture not unlike the story that Professor Mendelsohn was telling you about the northern parts of our country — the lake states and over to the northeast — where production increases dramatically between 50 per cent and 100 per cent in either the 2030 or the 2090 decade, depending on which scenario. In the mountain and Pacific areas there are also large increases, although you see that the southern plains and the northern planes have almost no increase, or a slight decrease, because there is some drought in the plains area in this scenario. You get some of that drought condition in this scenario.
Because you have this relative competitive advantage, some of these areas that are losing production are suffering economically. They are becoming not viable for production of many of these crops in some of the areas. In the southeast area there are large declines in production because of a great deal of drying in addition to the heat.
The Hadley Centre model shows much different results. There are large increases almost everywhere, although it is the same sort of regional pattern of bigger increases in the lake states, less increase in the south and somewhat less in the plains. The northern planes in this scenario benefit more. This is in that same 2030 decade and the increases grow over time because you are getting much moisture and warmth. It tends to improve.
In this slide, you can see the first blue and the first red, which are the Canadian climate model results for 2030 and 2090, and the yellow and light blue are the Hadley Centre model results for 2030 and 2090. The first set of blocks shows what happens to irrigated land. We see that there is a big reduction in the amount of irrigated land because of increased moisture; because of the heat, irrigated crops show relatively less improvement than dryland crops and dryland crops are able to take advantage of the increase in moisture. It does not do the irrigated crops any good to have more rain. It reduces the water bill a bit but it does not increase the productivity. It switches the advantage away from irrigated crops to dryland crops. There is somewhat of a decrease in cropland overall, in animal unit months, AUMs, on western grazing lands, and a large decrease in water use. There is not much change in labour use. We have more productivity per acre in general in these models and that results in less input use.
On the resource use, we also did specific studies of the Chesapeake Bay area and the Edwards Aquifer irrigated area. There we found that drier conditions in that particular area of Texas caused people to draw a lot more water out of the ground and put stress on the above-ground water sources habitat for ecosystems. There are pumping limits in that area to protect those ecosystems, but the estimates were those pumping limits would have to be tightened up quite a lot to maintain both the scenarios.
In the Chesapeake Bay area we found that the increased precipitation tended to create more runoff and therefore cause more nitrogen loading of the Chesapeake Bay so there was this environmental effect occurring that way. The Chesapeake Bay already has a lot of pollution in it and so we will have to fix that anyway. Climate change would make that worse if farming practices existed as they are. We looked at and found that a variety of changes in farming practices could reduce pollution either in the current climate or under that changed climate, although you still have some unresolved issues.
We also looked at variability in changes in El Niño. The El Niño Southern Oscillation, ENSO, is not that important an effect in Canada. However, the model shows some additional increases in losses if it were to happen. At this point, however, it is speculative because people do not really know what will happen with the ENSO event or whether it will increase in intensity or severity.
I wish I could tell you something positive in regard to adaptation. I will mainly talk about cautions. A few years may mislead with regard to the long-term trends. I have tried to show how some of the models suggest that. Unfortunately, predictability at the relevant spatial scales is a distant goal or impossibility. We are stuck trying to think the trends may not be consistent and we cannot predict well. That puts us in a hole.
One has to ask: Is an adaptive investment viable if the trend persists? Irrigation may work for a while, but if water resources disappear then you have sunk some money into something that will not work. If we have farmers in trouble, we want to help them, but economic assistance may reduce the incentive to make the difficult but necessary changes. Those are some of the tricks of trying to worry about climate adaptation.
What are some of the things that one might think about as one thinks about making an agriculture system that is adaptive and flexible? I hear the same point that Professor Mendelsohn made, which is that prices and profits and losses end up being signals of what one should do. One wants to have a flexible market that has the prices being transmitted effectively. There is much risk management and many market instruments for risk management: futures markets, weather derivatives, contract production and other ways in which the small loss of an individual farmer can be pooled across the market in some way. Crop insurance in the United States tends to be subsidized. That is difficult because it diminishes incentives and soon you have farmers having failures 10 years out of 11 and they really need to move on.
Monitoring analysis of weather trends and trying to look at them and make short-term forecasts can help people adapt to variability. We need to examine the robustness of strategies under climate change and what the potential responses might be. We know that we cannot predict them but we need to think about those broader sets.
People have come up with specific technological responses. One needs to think about water management, the crop varieties, planting dates and pest management. We found there is a tendency for increases in pests and diseases therefore, we have concerns about pest moving into areas that they have not been before. I put those last because in a sense one has to get all these other things right and then, since one cannot predict well, one cannot predict whether it is irrigation or planning for protecting against flooding, because at this point the projections are not good enough to make a recommendation.
With that I would end and be happy to answer your questions.
The Acting Chairman: I want to take issue with Dr. Reilly with tongue-in-cheek. Farmers would never farm for crop insurance. Having said that, I was pleased with the positive report you made about all the benefits Canada will have, Professor Mendelsohn, but our senators can only sit until the age of 75. Will they be here when these happen? What is the time limit?
Mr. Mendelsohn: Most of the things that you will see that will be dramatic will not happen until after 2050. It is not looking good for your seeing them yourselves.
Senator LaPierre: I am rather confused. The evidence that we have heard thus far is horrible compared with the joy and pleasure in this heaven that you have just described. I at a loss to know whether I should look forward to this or continue my campaign to awaken Canadians to the great disaster of climate change.
Is precipitation the key?
Mr. Mendelsohn: The problem you are observing now is most likely not climate change but the inter-annual variation of climate. In respect of holding climate steady, it is true that weather varies from year to year. Characteristically, Canada has always had dry years every once in a while — some are dramatically dry and dramatically bad.
Senator LaPierre: Senator Fairbairn, if she were here, would tell you what has happened in her part of the world. She certainly does not think that this is something that occurs every now and then; it is an appalling disaster.
Mr. Mendelsohn: I am not disagreeing having a drought is not harmful. It is clear it is harmful. There is much evidence that droughts have been part of the climate here for a long time. For example, I was doing some work in Saskatchewan and apparently, Saskatchewan virtually burned up entirely as a province 100 years ago. That happened in a drought.
Senator LaPierre: I am concerned about the message that this committee can bring to the community of Canadians. Some 85 per cent of us live in cities where climate change is of some importance, but we have little awareness on a day- to-day basis. As Senator Gustafson will tell you, the forests, the crops and the natural resources do not grow in the cities. They grow in the rural areas.
How will what you are telling us affect the people in the rural areas — those who farm the land and cut the trees, et cetera?
Mr. Mendelsohn: We have done some studies in the United States, for example, that looked at the relationship between climate and rural incomes. We found that people who lived in climates that led to increased agricultural productivity had higher incomes.
It is likely that the distribution of income in the rural areas is related to climate right now. For Canada that means the further north one goes the less productive the land is, the harder it is on the people who live there. I think you can see that already in Canada.
Senator LaPierre: According to your scenario, the land in the North will be more productive.
Mr. Mendelsohn: All of Canada will be more productive, but the agricultural part will simply be shifting northward. It is true that some people will be well above that area — especially the Aboriginal people.
Mr. Reilly: Precipitation is the key to a large degree and it is hard to project. Global studies that I have been involved with tend to show this general productivity increasing in northern parts of the world, of which Canada is part.
It is almost certain some areas of Canada may become very droughty; that will probably be in the plains. Some models show that and it could create severe stresses in some places.
The overall picture is one of improving productivity, but it will be very different in different places, and we cannot predict where those are.
Senator LaPierre: What will happen to the children and grandchildren of Senator Chalifoux's people? The Aboriginal people live in rural areas, on reserves and in the North, in particular.
Mr. Reilly: The lives of Aboriginal people who live in a confined area such as a reservation will change a great deal. The resources will change and it will, no doubt, be very disruptive for them. Their customs will change. It may be that they will face winters that are far less harsh. Winters may be shorter, but if the resources they have been used to relying on are no longer there, that will cause a lot of changes in the way they deal with things. I could not say how they will view these changes. I am not an expert in that area.
Mr. Mendelsohn: Most of the First Nations people live too far north to become beneficiaries of the agricultural improvements. It is most likely that they will remain in a forest zone.
Senator LaPierre: Will the benefits to the forests help them?
Mr. Mendelsohn: The benefits to the forests could help them to the extent that they can get some of those benefits. If they had title lands in the zone north of existing First Nation lands, as the productivity of the forest increases in the future those lands will become commercially viable. They could have opportunities there to completely change their economic situation.
Senator Tkachuk: On the question of carbon sequestration and energy use, will increasing temperatures mean less energy use for the world or North America, or more energy use?
Mr. Mendelsohn: For the United States, it means more energy use because we will have more cooling losses then we will have heating gains. For Canada, it might be an energy reduction, because you will not have to spend quite as much on heating as you did before.
Senator Tkachuk: For heating we use fossil fuels.
Mr. Mendelsohn: That is right.
Senator Tkachuk: If we are going to have increased vegetation and forestry, will that not have a cleansing effect in the sense of reducing CO2 emissions?
Mr. Mendelsohn: It will take carbon out of the atmosphere to grow those new trees.
Senator Tkachuk: Have there been studies done on what this will mean worldwide? If it applies to us, will it apply to Russia and other northern countries that use a lot of energy or fossil fuels? Will fossil fuel energy be as important if the temperature increases?
Mr. Mendelsohn: The globe is a big place. This phenomenon happens to polar countries, mainly Canada and Russia, although we can throw in the Scandinavian countries too. What happens here will be strictly beneficial. You will use far less energy to keep this building comfortable. However, as we move into the temperate zone we believe that they will have to use more energy, because they will have more problems with cooling than heating. In the subtropics and tropics, it will be strictly a problem for them because they will need much more cooling than they have now, and they will get no heating benefits.
Mr. Reilly: The space conditioning issue is somewhat important, but it will be relatively small and space conditioning is a relatively small proportion of all energy use. A great deal of energy is used in electricity, the industrial sector, and the transportation sector. What Mr. Mendelsohn has said is true. I would not predict massive benefits.
Mr. Mendelsohn: The things that I mentioned would not happen until 2080. At the end of the century we would start to see dramatic things. In the near term it will not be dramatic.
Senator Tkachuk: As some senators have said, we have heard many witnesses with many different predictions and theories about what will happen. With climatology, it is hard to predict the weather for next week. For example, even though we had a late fall, this winter was very cold. We usually have at least a week of nice weather in February, but this year it was cold for almost three months solid, and it was cold everywhere.
Was it as cold as I thought, or was I imagining things?
Mr. Mendelsohn: No, this was a cold winter. It was even cold in the United States.
Senator Tkachuk: What if this continues for two or three years? Was it colder all over the world or just here?
Mr. Mendelsohn: Just here. You must be careful about looking at regional effects because unusual switches of winds across the planet makes some places unusually cold and other places unusually warm. In the Rocky Mountain areas they did not have a cold winter, but in New England we had the same winter you had. It was very cold. You must be careful not to extrapolate from regional phenomenon to global phenomenon. They are not usually the same thing.
Senator Tkachuk: I was not trying to, but usually on the West Coast it is warm all the time and it was just a little warmer.
The Acting Chairman: I understand that this was the third coldest February on record.
Senator Tkachuk: I read an article that said that if it is too hot, it is global warming; if it is too cold, it is climate change. Climate change is a big industry. It is difficult to separate the chaff from the grain. Everyone is telling us that we have to spend more money on climate research. It is good for you, but how do I know that we really need to?
Would you comment on that, please? It is a political issue here, as I know it is in the United States.
Mr. Mendelsohn: It is always easier to have a climate change conference in the summer than in the winter. You are very observant to note that people are overly concerned about what is happening today in studying climate change. Climate change is a phenomenon that will happen over a century. It is difficult to see it today. I think people are overreacting; they are looking at things that are normal weather variance. They are calling it climate change when it happens to be hot, and then they keep quiet when it happens to be unusually cold. Much of that is an exaggeration of what will happen in the future.
Mr. Reilly: In reading the editorials, some of the folks that are supposedly our colleagues would jump on this sort of thing — the fact that it was an incredibly cold year — and say, it must be climate change. We hold our head a bit, because it discredits the area to leap on everything and point to it as climate change. In fact, it is possible that, within global warming, shut down of a thermohaline cycle could cause some local cooling. Those things are possible. The real story is that the information we get from one single year, or even two or three years, really does not tell us anything much about the trend.
We have to look at decades. If we had a full decade of very cold temperatures, world global temperatures, we would begin to doubt our theory. However, it would take a decade. Therefore, you have to look at it in that context.
Senator LaPierre: Is Kyoto all propaganda?
Mr. Reilly: It is a treaty.
Senator LaPierre: I am talking about the spirit of Kyoto — everything that goes around it. Is this all wrong?
Mr. Mendelsohn: We both believe that climate change is a real phenomenon. We believe the climate scientists are correct about this theory that, if you increase the greenhouse gases, you will warm the planet. We are not placing any doubt on that. When we try to do modelling on impacts, we have always taken the climate scientists' forecasts as our starting point. It happens that we recognize there is much variance in those forecasts. It might be that climate change will be relatively mild, and it will be only one or two degrees. If that is the case, then this can be beneficial for the entire world and Kyoto will be a mistake.
The other possibility is that climate change may be more severe. You might get something closer to 5 degrees warming. In that case, there will be a lot of damage in low-latitude countries in the world. They may not happen in Canada, but there will be damage in other parts of the globe.
Senator LaPierre: Then there is such a thing as climate change that is caused by emissions of greenhouse gases?
Mr. Mendelsohn: We are certain we are emitting these gases. We are certain that they are accumulating in the atmosphere. There is some evidence that the planet has warmed in the last century because of that. It is not what has happened so far that worries us. It is what will happen in the next century.
Senator LaPierre: If we continue along the same route?
Mr. Mendelsohn: Yes.
Mr. Reilly: I would say that I think some of the new research of some of my colleagues at MIT has statistically suggested you can attribute some of this historic warming to anthropogenic causes. I think the theory of global warning and radiative trapping of heat by greenhouse gases is well accepted. There was some question about whether you could really attribute the observed trends to those issues, and there is still much debate on that. Some scientists will say the trends are not consistent with the warming. The newer evidence shows you can say that anthropogenic forcing is causing a good chunk of that climate change.
One of the complicating factors is that sulphate aerosols also cause cooling. As a result, there have been multiple impacts of humans on the climate, some of them offsetting the warming. We have been changing them all the same time, and that has some different effects.
The Acting Chairman: Senator Oliver is the chairman of the committee. We will give him a bit of leeway.
Senator Oliver: Thank you very much, Mr. Acting Chairman and Mr. Former Chairman.
It is a deep honour for us that you two distinguished scientists from the United States would come here to help us in our study. Because you are Americans and have an American experience, I would like to put some theoretical questions to you so we can learn from your studies and experience in the United States about some things that we might want to be doing here in Canada.
We have had evidence before this committee that climate change is, in fact, a reality and we have to come up with some adaptation strategies. We are a committee that makes public policy, so we are looking at the types of public policies we might be able to recommend in relation to adaptation strategies.
Could you give us some idea of what is a successful adaptation strategy and what it might look like? Do you have examples of adaptation initiatives undertaken at any level of the government in the United States? That is my first question.
The second question is a bit more theoretical because well-designed adaptation strategies have the potential to augment benefits and minimize negative effects of climate change on a nation, and especially climate-dependent sectors such as agriculture and forestry. What are some of the key characteristics of well-designed public adaptation measures that governments can undertake and encourage? Second, and what is the biggest challenge that governments face in designing efficient policies that encourage adaptation?
I am concerned about the forestry and agricultural sectors. I am asking for some kind of academic framework that we should be looking at, and that we might want to recommend, based upon your experience and your studies.
Mr. Mendelsohn: We look very far ahead. When we look ahead to 2050 and especially 2100, we expect that farmers should have made lots of changes in the way they grow crops as the climate warms. What you would expect is something similar to the ecological models where biomes shift northward. We are also expecting that same phenomenon to occur with crops. If you look at where crops are grown currently, each one is designed to grow in a particular climate zone. We are expecting that those climate zones will shift as the climate warms. Crops in general will be shifting northward up to about 500 miles if you think of the largest climate changes that people are thinking about by 2100.
Farmers should be adjusting which crops they grow as the climate warms. It is important that they do that gradually and wait for the climate to get warm enough to grow the new crop. You do not want to encourage farmers to start growing today what is appropriate in 2100 because those crops will fail today.
Senator Oliver: Are there models available to help determine when a crop should be grown and how many days you need to grow that crop?
Mr. Mendelsohn: Yes. Your agricultural experts will know for the major crops that you currently grow, exactly what range of temperatures and conditions are necessary for those crops to survive.
You want to start doing is look south for crops that are grown currently in the northern United States. Look at what are those ranges, where do those crops want to grow? Then, as the climate warms decade by decade, you want to see if it has gotten warm enough to start taking some of those southern crops and moving them into Canada. In the meantime, the crops you have in Canada will be able to expand slightly northward.
Senator LeBreton: Other witnesses have talked about the growing potential moving north. What about the southern part of the United States? Do they stay constant, or are their potential crops different? Is it only as you come north that the weather patterns change and the growing area expands?
Mr. Mendelsohn: If it is a mild climate scenario and it does not get too warm, the CO2 benefits will offset the warming damages that our southern United States will suffer. In a very mild scenario, we see benefits all over the entire country. If it is a more severe scenario, a change of four to five degrees, then the southern part of the United States would become vulnerable.
We actually see damages. In every one of the models at which we looked, the southern United States starts becoming vulnerable.
Senator LeBreton: Would there be crops that they could no longer grow because it would be too hot?
Mr. Mendelsohn: That is right. They could bring in subtropical crops to replace them, but they would be of lower value.
Mr. Reilly: In the scenarios we looked at for the United States, we saw much less frost damage to citrus in the south. Therefore, you did not have some of the freezes that you have now that sometimes are damaging. You get some benefits for some crops, but then losses for soybeans largely because dryness would result.
There are differences depending on the crops. You can see some of the warm season crops doing somewhat better. The worst scenarios for us were dryness. If you have drought, then not much grows well, unless you have irrigation with it.
Mr. Mendelsohn: Another adaptation you could expect to see in the south is more use of irrigation.
Mr. Reilly: I would like to address the original question about adaptation strategies. Having worked with Canadians scientists before, I know that there has been more thought about adaptation strategies in Canada than there has been in the United States. There has not been much activity to study how the U.S. would adapt to climate change. There has been no real effort to think about it to this point.
There are drought task forces and other things to deal with climate variability, but that is not climate change, it is just normal climate variability.
Senator Oliver: Based upon your reading, knowledge, experiments and experience, can you tell us what would be well-designed public measures that we might want to consider?
Mr. Mendelsohn: The word ``public'' is an important adjective. Most of the measures that I described are private measures.
Senator Oliver: You told us about the trend of moving north.
Mr. Mendelsohn: Your question is, ``What would the government have to do?''
Senator Oliver: That is what I am getting at.
Mr. Mendelsohn: There are examples with water allocation where the government might try to ensure that water is allocated efficiently to new irrigation schemes where the greatest good would be done. The government clearly has a role in providing information about climate. The government can also make farmers alert to the possibility that there will be changes and inform them of the kind of things they ought to be considering because of those changes and the kind of things our experiments seem to suggest that they should do. Farmers could look at those and decide if they look like wise ideas.
Senator Oliver: There are new pests and new plants varieties. What role should government have in relation to that?
Mr. Reilly: The question is: ``How do you see Canadian agriculture developing?'' For many years, and very productively, public funding of agricultural research developed many varieties and hybrids. They considered how farmers might adapt to different things. Some time around 1980, when I was working for the U.S. Department of Agriculture, we tracked research funding. Research funding by the private sector had exceeded public support of research and development.
At this point, some of the research on things that you might think about in the public sector for looking at different varieties is being done effectively by the private sector. In the U.S., some of the major seed companies have been working with some of the climate scientists trying to understand better what those scientists can say about climate. The seed companies are thinking about how that would affect their breeding strategy.
We have a huge cooperative extension service in the United States. We have various sorts of help for farmers. It is useful to some extent, but more of that is moving to private sector firms. You have the weather service making weather forecasts. Private weather forecasting agencies pick up that information. Farmers subscribe to that private agency to give them early warnings on frost and other sorts of things.
It is a question of how you see the public versus private role emerging in your economy. The private sector can take on much of the risk management that has formerly been the purview of federal agricultural policy in the United States, which was trying to even out prices or provide subsidized crop insurance.
We see private market instruments developing to allow farmers to pool their risks. The most robust strategy is providing assistance in providing information, keeping a market open, helping farmers learn about new markets and providing training and education. We cannot predict what will happen. All we can do is get the people out there who have to adapt to be as smart as possible.
Senator Oliver: Keep on top of the change.
The Acting Chairman: Varieties change and experience has stayed ahead of global warming, if you will. A good example is canola. For years, they told us that the only place you could canola is in Melfort, Saskatchewan, up north. Now they are growing it in South Dakota because of the different varieties. Sunflowers have worked the opposite way. They said that you could not grow them in the North, but they are growing them further north than before. That is basically due to the change in varieties.
Mr. Reilly: That reminded me of an interesting result we found in the national assessment. We tried to look at the variability of the yield, and where crops were grown in the United States and how these changed from 1880 to the year 1990. We plotted production in the United States for wheat, corn and soybeans. We mapped out how it moved first westward and then northward. Before we had actually looked at the plotting, we noticed that the average place at which crops had grown had experienced a 4-degree centigrade temperature cooling change. Corn production, because of varietal changes, had shifted north. Development of varieties had overtaken any climate change.
We expected it to be warmer where the crops were now grown, but the crops had moved further than the climate had warmed. It was a surprising result at first, but it attests to your point.
Mr. Mendelsohn: There is another point with respect to precipitation. If it turns out that Canada will have a dry centre, you could try to see whether you could adapt crops to the dryness. Investing in that right now would be premature, because you might never experience that dryness. If it turns out that that particular scenario is what you will experience, then some future Senate can try to address that problem.
Senator Hubley: As someone mentioned, we have recently returned from Western Canada where we were looking at different aspects of agriculture. We had an opportunity to speak to an elderly native person. It was interesting. He did not need a lot of graphs or diagrams to tell us how he has seen changes in his lifetime in the weather patterns and systems and how things grow. There is information out there and it is being seen not only by our native Canadians, but also certainly by our farming community.
We have discussed this many times. Many of my colleagues have touched on it. What will be our ability to take the scientific evidence that we have and find the avenue to get that to the farming communities and the forests? In your experience in the United States, have you begun the process? Do you see ways in which you will progress?
Perhaps you do not feel that it will be your obligation or business to do that, it might be some other avenue. However, what way would you go about communicating the information you have about climate change with the people on the ground?
Mr. Mendelsohn: It is useful to give farmers a sense of how things might unfold over the next century, so they can see what kinds of changes to be alert for. The critical reaching-out that you are describing is something that probably ought to be done on a decadal basis. Every decade you try to make clear to people what you think the climate looks like in Canada and because it looks a certain way, what kind of farming opportunities would that actually present to them? We could learn as we go.
Although it may be difficult for us to sit here right now and predict what you ought to do in 2050, the idea is you might have some sense of that in 2040. By continually updating as we move through this process, we will find that the adaptation advice that we give to farmers can be pertinent and relevant to the decisions they have to make now.
Senator Hubley: We would all agree with that. The information that we have is going to assist the farming community with making the decision, not necessarily too far beforehand. However, they will be aware of the fact and they can make those judgments pertaining to their operation and not do it in a catch-up way, where we are into crop failures and things of that nature before we respond.
Mr. Mendelsohn: The only caution is one that Mr. Reilly raised before. You want to refrain from trying to insulate the farmers from paying attention to climate. One of the things we observe in Europe, for example, is the bigger their subsidies, the worse their farming conditions are. That is precisely the wrong incentive to give farmers, because that means that they will not make any adjustments whatsoever as the climate changes.
Senator Fraser: As Senator Oliver said, the function of senate committees is, in large measure, to recommend public policy. Public policy in Canada is, on a permanent basis, much exercised by what to do about remote communities. I know the phenomenon exists in parts of the United States as well, but we are certainly plagued by rural exodus.
There is a public policy question about to what extent should we, for example, prop up Bloggsville, because 20 years down the road, Bloggsville actually has a future. It is in the national interest to keep communities going, if they have a future. If that future is 80 or 100 years down the road, then we will say it is not worth taxpayers' dollars in the interim. They can rebuild Bloggsville 100 years from now.
You have stressed that the big changes are a long way away. Out of the various graphs and charts that you have given us, what is your time scale? At what point do things become noticeable enough that public policy now can look two or three decades down the road and say, ``this is worth public intervention, because it will work then, even if it does not now.''
Mr. Mendelsohn: We have just started doing some dynamic impact analyses. That very question is one of the things we were trying to address. We have asked ``When will we first start seeing climate change in a way that we are confident that it is climate change and an impact of climate change?'' What we concluded was that, some time in the 2030-2060 range, you would start seeing climate impacts in two places. One is in the polar countries, of which Canada is one; the other is in the tropics. They will be the first places we will start seeing things happening. We are expecting that you will get benefits in that period. Those should start being visible to you by then.
Senator Fraser: That is 25 to 30 years from now.
Mr. Mendelsohn: It is not beyond a lifetime, no.
Senator Fraser: Even for some senators.
Mr. Reilly: There is evidence that climate has already changed and there is satellite evidence that you see regular earlier spring throughout the far northern area already. You have observed some effects of climate change that have occurred at some level. We are more or less adjusted to what we have been seeing for the last couple of decades and the issue is, if we look ahead another couple of decades, the variability of climate is such that the small signal we will see over those couple of decades will not rise out of that.
We are always looking back at a history where, under our normal climate of the past couple of decades, it will be hard to see the signal until we get really rapid climate change — until the temperatures starts rising 3/10ths of a degree or more a decade. Where is that signal, relative to the variability? Given how much variability there is, a couple of decades can overwhelm the signal in the variability.
Senator Fraser: I appreciate particularly that scientists are always reluctant to say, ``I am giving you a prediction,'' and rightly so. I am not quarrelling with that. On the other hand, public policy's job is to look at this shifting ground of ``what ifs?'' and decide. This seems like the one that, perhaps, we should prudently plan to take account of.
Professor Mendelsohn, one of your slides refers to an expected large increase in northern boreal forest. That struck me, because two or three years ago on another committee of which I was a member, I heard a climate expert tell us that there were significant chances that, as you suggest, the northern and southern borders of the boreal forest will shift substantially. He said that the whole thing could be moving up to areas where the soil is not suitable for those trees. Have you looked at that?
Mr. Mendelsohn: Yes. We are expecting that the forests will go up on to the Canadian Shield. Will the forests be luscious, productive forests? No. They will be limited by that soil. However, that will become land suitable for forests, so you will get trees there. They will not be big trees.
Senator Fraser: Are we taking these wonderful increases in forest production into account?
Mr. Mendelsohn: There will be enormous increases in the boreal forest, because the expansion into tundra by the ecologists is predicted to be big. It is possible that some of the eastern hardwood forests will move up into the southern parts of Canada. We are predicting that increases in other forest types will push the boreal a little bit; however, it will not be nearly as dramatic as the northward expansion.
Most of what we are talking about in terms of expansion of commercial forestry is actually just that southern strip of that forest. That northern stuff is not commercially viable.
Senator Oliver: Mr. Reilly, since I have arrived, on two occasions you have referred to crop insurance, farm support programs and some of their effects. When we were out west, we heard farmers talk about the fact that some of our current farm support programs and crop insurance do not help, even with the small climate change we have seen already. One of the things they have asked us to look at is if the programs are not suitable for the adaptation right now, in what way should they be changed?
I would like to put that question to you about your U.S. experience. Based upon what crop insurance and what farm support programs are doing with climate change being a reality now, what policy changes would you like to see in those programs to help the adaptation process?
Mr. Reilly: I would like to see them eliminated. The unfortunate aspect of the farm programs, from an economist's standpoint, is that to the extent you supplement income, subsidies become capitalized into the value of the land. If people can expect farm program payments, then land prices go up because there is an expectation they will make farming more productive. It is a wealth effect initially, but when that farm transfers to someone else and they sell it, that price is reflected in it. That next purchaser of the farm is now then just earning a normal return on this property that has had the price capitalized a little bit by the farm program payments. He then is just on the edge, because they have paid some price that has had the value of farm program payments capitalized into it. It seems to me to be a losing proposition that in order to make things better, you have to continually unexpectedly increase farm program payments so that the next generation can justify the price they paid for their land.
It is a difficult problem. What seems like the obvious solution in the short term turns out to have not worked in the longer term.
The Acting Chairman: The rebuttal is this: As long as you have the American Farm Bureau — which is the most powerful lobby in Washington — this will never happen.
Mr. Reilly: As long as we keep having elections decided by a few votes.
The Acting Chairman: Thank you. I thank you for an excellent presentation, gentlemen. We welcomed your positive approach to this important subject.
The committee adjourned.