Policy implications of climate variability on agriculture: Water management in the Po river basin, Italy

Abstract

This paper discusses the policy implications of changing hydro-climatic conditions for water management in the Po river valley. This area is characterized by heterogeneous topographical features and intensive water use in agriculture. The first and most fundamental level of adaptation to climate change in agriculture occurs at the level of the local farmer. Farmers undertake strategies to adapt to the form of climate change that they are able to foresee, through observation of the recent trends in indicators such as average temperatures and average precipitation. However, they can do little to respond to the greater uncertainty inherent in climate change. The role of policy will be to address this residual uncertainty, investing in institutions and infrastructure. Notably, climate variability implies a water storage problem: we discuss the different roles that the private and public sector can play in managing the water stock across space and time to prevent agricultural yield fluctuations causing welfare loss.