From rainfall to farm incomes - Transforming advice for Australian drought policy. I. Development and testing of a bioeconomic modelling system

In this paper we report the development of a bioeconomic modelling system, AgFIRM, designed to help close a relevance gap between climate science and policy in Australia. We do this by making a simple econometric farm income model responsive to seasonal forecasts of crop and pasture growth for the coming season. The key quantitative innovation was the use of multiple and M-quantile regression to calibrate the farm income model, using simulated crop and pasture growth from 2 agroecological models. The results of model testing demonstrated a capability to reliably forecast the direction of movement in Australian farm incomes in July at the beginning of the financial year (July-June). The structure of the model, and the seasonal climate forecasting system used, meant that its predictive accuracy was greatest across Australia's cropping regions. In a second paper, Nelson et al. (2007, this issue), we have demonstrated how the bioeconomic modelling system developed here could be used to enhance the value of climate science to Australian drought policy