Implications of seasonal climate forecasts on world wheat trade: a stochastic, dynamic analysis

Improvements in seasonal climate forecasts have potential economic implications for international agriculture. A stochastic, dynamic simulation model of the international wheat economy is developed to estimate the potential effects of seasonal climate forecasts for various countries' wheat production, exports and world trade. Previous studies have generally ignored the stochastic and dynamic aspects of the effects associated with the use of climate forecasts. This study shows the importance of these aspects. In particular with free trade, the use of seasonal forecasts results in increased producer surplus across all exporting countries. In fact, producers appear to capture a large share of the economic surplus created by using the forecasts. Further, the stochastic dimensions suggest that while the expected long-run benefits of seasonal forecasts are positive, considerable year-to-year variation in the distribution of benefits between producers and consumers should be expected. The possibility exists for an economic measure to increase or decrease over a 20-year horizon, depending on the particular sequence of years.

Commonwealth of Australia: July to December 2001

The six-month period from July to December 2001 was an extraordinary phase in Australia’s political history. Until 26 August, when 460 asylum seekers were rescued from their sinking vessel off the Western Australian coast, there was nothing to suggest that politics in Australia would be any different from the usual round of policy pronouncements, routine attacks by the opposition, and the occasional headlinegrabbing scandal. It seemed, as the Australian’s international editor Paul Kelly wrote, that tax would dominate the 2001 federal election campaign (21-22 July 2001). Once the asylum seekers had been rescued by the Norwegian freighter Tampa and refused entry to Australia, however, tax declined in significance. The ramifications of the Tampa incident and its aftermath were still engaging the Australian polity when, on 11 September, terrorists hijacked four passenger jets in the United States and flew two of them into the World Trade Centre in New York, one into the Pentagon, and crashed another in Pennsylvania, killing, it was estimated, more than 6000 people. Both incidents changed Australian politics. The extent and significance of the changes remain to be fully seen, but one short-term effect was to boost significantly the government’s chances of re-election.