Cooperation needed! The case of drought management in Austria

By Marlene Palka, research assistant in the IIASA Risk and Resilience Program

Marlene Palka discusses the work done by the IIASA FARM project, which has been investigating drought risk management in Austria for the past three years.

Future climate projections forecast an increase in both the frequency and severity of droughts, with the agricultural sector in particular being vulnerable to such extreme weather events. In contrast to most other climatic extremes, droughts can hit larger regions and often for extended periods – up to several months or even years. Like many other countries, Austria has been and is expected to be increasingly affected, making it necessary to devise a management strategy to mitigate drought damages and tackle related problems. The FARM project – a three year project financed by the Austrian Climate Research Program and run by the IIASA Risk and Resilience and Ecosystems Services and Management programs – kicked off in 2017 and has been investigating agricultural drought risk management both in a broad European context, and more specifically in Austria.

Young sunflowers on dry field © Werner Münzker | Dreamstime.com

Austria represents a good case study for agricultural drought risk management. Despite the agricultural sector’s rather small contribution to the country’s economic performance, it still has value and represents an important part of the country’s historical and cultural tradition. Around 80% of Austria’s total land area is used for agricultural and forestry activities. Equally important is its contribution to the preservation of landscapes, which is invaluable for many other sectors including tourism.

Globally, agricultural insurance is a widely used risk management instrument that is often heavily subsidized. Apart from the fact that the concept is increasingly being supported by European policymakers – the intention being that insurance should play a more prominent role in managing agricultural production risk – more and more voices from other sectors are calling for holistic management approaches in agriculture with the overall aim of increasing the resilience of the system.

There is a well-established mutual agricultural insurance company in Austria, which has high insurance penetration rates of up to 75% for arable land, and comparably high subsidies of up to 55% of insurance premiums. It is also encouraging to note that recent policy decisions support the timeliness of drought risk: in 2013, the Austrian government paid EUR 36 million in drought compensation to grassland farmers and in 2016, premium subsidies of 50% were expanded to other insurance products, including drought, while ad-hoc compensation due to drought was officially eliminated. In 2018, the subsidy rate was further increased to 55%. In light of these prospects, we investigated the management option space of the Austrian agricultural sector as part of the FARM project.

The 2018 Organisation for Economic Co-operation and Development (OECD) report on monitoring and evaluation of agricultural policies claims that efficient (drought) risk management in agriculture must consider the interactions and trade-offs between different on-farm measures, activities of the private sector, and government policies. The report further argues that holistic approaches on all management levels will be vital to the success of any agricultural management strategy.

In the course of our work, we found that agricultural drought risk management in Austria lacks decision making across levels. Although there is a range of drought management measures available at different levels, cooperation that includes farms, public and private businesses, and policy institutions is often missing. In addition, measures to primarily and exclusively deal with drought, such as insurance and irrigation, are not only limited, but (as we found) are also less frequently implemented.

As far as insurance is concerned, products are still being developed, and penetration rates are currently low. Drought risk is also highly uncertain, making it almost impossible to offer extensive drought insurance products. Irrigation is perceived as the most obvious drought management measure among non-agronomists. Simply increasing irrigation to deal with the consequences of drought could however lead to increased water demand at times when water is already in short supply, while also incurring tremendous financial and labor costs and additional stress to farmers. With that said, a large number of agricultural practices may also holistically prevent, cope with, or mitigate droughts. For example, reduced soil management practices are low in operating costs and prevent surface run-off, while simultaneously maintaining a soil structure that facilitates increased water holding capacity. Market futures might also stabilize farm income and therefore allow for future planning such as the purchase of irrigation equipment.

A workshop we held with experts from the Austrian agricultural sector further highlighted this gap. Thinking (not even yet acting) beyond the personal field of action was rare. The results of a survey we conducted showed that farmers were experiencing feelings of helplessness regarding their ability to manage the negative effects of droughts and other climatic extremes despite the implementation of a broad range of management solutions. One way to explain this could be a lack of cooperation across different management levels, meaning that existing efforts – although elaborate and well-proven – potentially reach their limit of effectiveness sooner rather than later.

Due to the more complex effects of any indirect/holistic drought management measure, we need tailored policies that take potential interdependencies and trade-offs into account. With evidence from the FARM project, my colleagues and I would like to emphasize an integrated risk management approach, not only at farm level but also in all relevant agencies of the agricultural sector in an economy. This will help to secure future production and minimize the need for additional public financial resources. Our findings not only contribute to ongoing high-level discussions, but also underpin the resulting claim for more holistic (drought) risk management with bottom-up data from our stakeholder work.

Note: This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Building bridges between Europe and Asia

By Dmitry Erokhin­, MSc student at Vienna University of Economics and Business (Wirtschaftsuniversität Wien) and IIASA Youth Forum participant

Dmitry Erokhin

Dmitry Erokhin at “Connecting Europe and Asia”

On 14 December 2018, the Austrian Central Bank and the Reinventing Bretton Woods Committee co-organized a high-level conference on “Connecting Europe and Asia,” convening high-level policy makers, top business executives and renowned researchers. Taking place toward the end of the Austrian Presidency in the Council of the European Union, the goal of the event was to discuss ways to improve cooperation between Europe and Asia.

As a true Eurasianist and a member of the European Society for Eurasian Cooperation I was really interested in attending the conference.

It was opened by the governor of the Austrian Central Bank, Ewald Nowotny, who said that cooperation between Asia and Europe is vital, especially with China’s growing economic and political influence. Nowotny expressed regret that some countries see this as a challenge rather than an opportunity. Europe, however, remains the best place to be because of its economic strength.

Marc Uzan, the executive director of the Reinventing Bretton Woods Committee, noted that we live in a new age of connectivity. The economic ties between the EU and Asia are quite strong but there is still space for stronger connectivity in the form of physical and non-physical infrastructure, market integration, and maintaining stability in Central Asia. Uzan highlighted the role of the European Investment Bank in various connecting projects.

During the panel session on “Integration in Europe: European Union and Eurasia”, Elena Rovenskaya, the program director for Advanced Systems Analysis at IIASA, presented the institute as a neutral platform for depoliticized dialogue. IIASA has been running a project on the “Challenges and Opportunities of Economic Integration within a Wider European and Eurasian Space” since 2014, analyzing transport corridors, foreign direct investment, and convergence of technical product standards between EU and the Eurasian Economic Union.

This report was especially exciting for me because I had a great opportunity of participating in the International Youth Forum “Future of Eurasian and European Integration: Foresight-2040”, hosted by IIASA in December 2017, and found it interesting to see how research into Eurasian integration at IIASA has advanced since then. The concept of dividing the integration in two subgroups (bottom-up and top-down) suggested by Rovenskaya also seemed new to me.

‘Bottom-up’ integration requires coordination between participating countries and involves development of transport and infrastructure  – known as the Belt and Road Initiative – including development of the Kosice-Vienna broad gauge railway extension, and the Arctic railway in Finland. The top-down scenario would be based on cooperation between regional organizations and programs such as the EU, the EAEU and the Eastern Partnership. The challenge lies in harmonizing different integration processes.

I find it unfortunate that despite the positive impact of theoretical EU-EAEU economic integration and cooperation showed by IIASA’s research, the economic relations between the EU and the EAEU are currently defined by foreign policies and not by economic reasoning.

In his address, William Tompson, the head of Eurasia Department at the Global Relations Secretariat of the OECD, highlighted that the benefits of enhanced connectivity were not automatic and that complex packages, going beyond trade and infrastructure, would be needed. I consider that Tompson raised an important point that we should not exaggerate the benefits – landlocked locations and distance to global markets can be mitigated but not eliminated. Coordination among countries to remove infrastructure and non-infrastructure bottlenecks will necessary.

Tompson’s empirics convinced me that there is a call for change. Kazakhstan pays US$250/t of freight to reach the countries with 20% of the global GDP, compared to just US$50 for Germany and the US. This is due to factors like distance, speed, and border crossings.

I was impressed by Tompson’s international freight model. It shows that logistics performance is generally poor, and competition could be enhanced. The link between policy objectives and investment choices is often unclear. Tompson also criticized the ministries of transport, which he called “ministries of road-building”, for not knowing that transport was far more than that.

The head of unit in the European Commission, Petros Sourmelis, presented the EU’s perspective. According to him, the EU is open to deeper cooperation and trade relationships with its Eastern partners, however, there are many barriers, including the EAEU’s incomplete internal market.

I consider the proposal made by Sourmelis that “one needs to start somewhere” and his hope for more engagement quite promising, but engagement at the political level is some way off. However, the EU has seen constructive steps from Russia and is open to talks to build trust.

Member of the Board of the Eurasian Economic Commission Tatyana Valovaya closed the high-level panel session. I think it was a good lead-up to start with a historical analogy of the ancient Silk Road. According to her, the global trade geography in the 21st century is shifting once again to Asia and China was likely to become a leading power within the next 20 years. I was encouraged by the idea that regional economic unions will likely lead to better global governance and building interregional partnerships between Europe, Asia and Eurasia will be vital to achieve it.

Valovaya reminded delegates that in 2003 a lot of political and technical work had been achieved towards EU-Russia cooperation, which had then been stopped for political reasons. In 2015, the EAEU began wider cooperation with China as part of the Belt and Road Initiative, and in May 2018 a non-preferential agreement was signed to harmonize technical standards and custom regulations, to decrease non-tariff barriers as much as possible and to support cooperation projects in the digital economy.

I share the view of Valovaya that the EAEU should not only consider China as a key partner. Valovaya gave the US as a good example, which has multiple economic partnership agreements. She admitted that the EAEU had some “growth pains” but stressed it is normal for such a project and efforts are focused on solving the problems.

As for me, I believe it is necessary to understand the fundamental differences for the further connectivity. Valovaya emphasized that the EAEU was not aiming to introduce a common currency or to create a political union like the EU. EU-EAEU cooperation will strengthen both unions. More technical cooperation will be needed. And, of course, the leaders of the EU should be participating in the dialogue to better understand the EAEU and its work towards more connectivity in Eurasia.

 Note: This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Cornelius Hirsch: Digging into foreign investment in agriculture

By Parul Tewari, IIASA Science Communication Fellow 2017

Two things are distinctly noticeable when you meet Cornelius Hirsch—a cheerful smile that rarely leaves his face and the spark in his eyes as he talks about issues close to his heart. The range is quite broad though—from politics and economics to electronic music.

Cornelius Hirsch

After finishing high school, Hirsch decided to travel and explore the world. This paid off quite well. It was during his travels, encompassing Hong Kong, New Zealand, and California, that Hirsch started taking a keen interest in economic and political systems. This sparked his curiosity and helped him decide that he wanted to take up economics for higher studies. Therefore, after completing his masters in agricultural economics, Hirsch applied for a position as a research associate at the Austrian Institute of Economic Research and enrolled in the PhD-program of the Vienna University of Economics and Business to study trade, globalization, and its impact on rural areas. Currently, he is looking at subsidies and tariffs for farmers and the agricultural sector at a global scale.

As part of the 2017 Young Scientists Summer Program at IIASA, Hirsch is digging a little deeper to analyze how foreign direct investments (FDI) in agricultural land operate. “Since 2000, the number of foreign land acquisitions have been growing—governmental or private players buy a lot of land in different countries to produce crops. I was interested in knowing why there are so many of these hotspots in the world— sub-Saharan Africa, Papua New Guinea, Indonesia—why are people investing in these areas?,” says Hirsch.

Farming in one of the large agricultural areas in Indonesia ©CIFOR I Flickr

Increased food demand from a growing world population is leading to an increased rate of investment in agriculture in regions with large stretches of fertile land. That these regions are largely rain-fed make them even more attractive for investors as they save the cost of expensive irrigation services. In fact, Hirsch argues that “the term land-grabbing is misleading. It should actually be water-grabbing as water is the foremost deciding factor—even more important than simply land abundance.”

Some researchers have found an interesting contrast between FDI in traditional sectors, such as manufacturing, and the ones in agricultural land. While investors in the former look for stable institutions and good governmental efficiency, FDI in land deals seems to target regions with less stable institutions. This positive relationship between corruption and FDI is completely counterintuitive. Hirsch says that one reason could be that “sometimes weaker institutions are easier to get through when it comes to such vast amount of lands. A lot of times these deals and contracts are oral and have no written proof—the contracts are not transparent anyway.”

For example in South Sudan, the land and soil conditions seem to be so good that investors aren’t deterred despite conflicts due to corrupt practices or inefficient government agencies.

One of the indigenous communities in Madagascar, a place which is vulnerable to land acquisitions © IamNotUnique I Flickr

One area that often goes unnoticed is the violation of land rights of indigenous communities. If a government body decides to sell land or give out production licenses to investors for leasing the land without consulting the actual community, it is only much later that the affected community finds out that their land has been given away. Left with no land and hence no source of livelihood, these communities are forced to migrate to urban areas.

A strain of concern enters his voice as Hirsch talks about the impact. “Land as big as two times the area of Ecuador has been sold off in the past—but it accounts for a tiny percentage of the global production area.” With rising incomes and greater consumption of meat, a lot of land is used to produce animal feed crops. “This is a very inefficient way of using land,” he says.

During the summer program at IIASA, Hirsch is generating data that will help him look at these deals in detail and analyze the main factors that are taken into consideration before finalizing a land deal. At the moment he is only able to give an overview of land-grabbing at the global level. With more data on the location of the deals he can look at the factors that influence these decisions in the first place such as the proximity between the two countries involved in agricultural investments and the size of their economies.

While there is always huge media coverage when a scandal about these land acquisitions comes out in the open, Hirsch seems determined to dig deeper and uncover the dynamics involved.

About the researcher
Cornelius Hirsch is a research associate at the Austrian Institute of Economics and Research (WIFO). At IIASA he is working under the supervision of Tamas Krisztin and Linda See in the Ecosystems Services and Management Program (ESM).

This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Nothing new under the sun?

An interdisciplinary research project explores glo-cal entanglements of power and nature in 18th century Vienna

By Verena Winiwarter, Guest Research Scholar, IIASA Risk and Resilience Program, and Professor, Centre for Environmental History, Alpen-Adria-Universitaet Klagenfurt.

Nowadays, rulers turn to primetime TV events to demonstrate their power, be it putting men on the moon, testing missiles, or building walls. When the kings of France, in particular Louis XIV and XV, built Versailles, they had the same goals: To claim their leading role in Europe and make their mastery of nature and their subjects visible for all.

In the 1700s, the Austro-Hungarian Empire had to pull off a comparable feat, in particular as Emperor Charles VI had a huge constitutional problem: His only surviving child, a smart and pretty daughter, was not entitled to the throne. Only men could be emperors of the Holy Roman Empire. So while eventually, an international agreement allowed young Maria Theresia to succeed him, her position was clearly weak and would become contested right after her father’s death.

The construction of Vienna’ Schönbrunn Palace, and the taming of the river that flows by it, served as an international declaration of power by the Habsburgs and helped secure Maria Theresia’s position. Vienna, the Habsburg capital, already sported a summer palace in the game-rich riparian area to the west of the city center, close to a torrential, but rather small tributary of the Danube, the Wien River. Here, the leaders decided, a palace dwarfing Versailles should be built. One of the most famous architects of his time, J.B. Fischer von Erlach originally designed a grandiose structure that could never have been carried out. But it staked a claim and when seven years later, a more realistic plan was submitted, it became the actual blueprint of what today is one of Vienna’s most famous tourist sites.

Fischer v. Erlach’s second, more feasible design for Schönbrunn Palace (Public Domain | Wikimedia Commons)

While the kings of France built in a swamp and overcame a dearth of water by irrigation, the Habsburgs’ choice offered another opportunity to show just how absolute their rule was: the torrential Wien River had damaged the walls of the hunting preserve with its then much smaller palace several times. Putting the palace right there, into a dangerous spot, allowed the house of Habsburg to prove that their engineers were in control.

The flamboyant new palace was deliberately placed close to the Wien River, necessitating its local regulation. This had repercussions for those living up- and downstream, as flood regimes changed. Not all such change was beneficial, as constraining the river’s power meant that it found outlets elsewhere. In this case, European power struggles affected the course of a river, putting a strain on locals for the sake of global status.

In the 19th century, effects of global events and structures played out in favor of local health, when it came to building sewers along the by then heavily polluted Wien River. The 1815 eruption of the Tambora volcano in Indonesia led to unusually heavy rains during the otherwise dry season and the proliferation of cholera, which British colonial soldiers brought to Europe. A cholera epidemic hit Vienna in 1831/32, creating momentum to finally build a main sewer along Wien River. The first proposals for a sewer date back to 1792; they were renewed in 1822, but due to urban inertia, the sewer was not built. Thousands of deaths (18,000 in recurring outbreaks between 1831-1873) called for a response, and from 1831 onwards, collection canals were built.

A global constellation had first affected locals negatively, but with long-term positive outcomes of much cleaner water.

We uncovered these stories of the glo-cal repercussions of Wien River management during the FWF-funded project URBWATER (P 25796-G18) at Alpen-Adria-Universität Klagenfurt with the joint effort of an interdisciplinary team. We have shown in several publications how urban development was intimately tied to the bigger and smaller surface waters and to groundwater availability, telling a co-evolutionary environmental history.

The overall development of the dammed and straightened, then covered river can be seen in science-based videos by team member Severin Hohensinner for 1755. At 2:00 in the video, the virtual flight nears Schönbrunn on the right bank, with the regulation measures visible as red lines. A comparison between 1755 and 2010 is also available. Both videos start with an aerial view of downtown Vienna and then turn to the headwaters of the Wien, progressing towards the center with the flow.

More on the project, including links to publications and images are available at  http://www.umweltgeschichte.uni-klu.ac.at/index,6536,URBWATER.html

This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.

Post-truth? Science responds through art

By Gloria Benedikt, IIASA Science and Arts Associate

This post was originally published in the magazine of the 2017 Vienna Science Ball

Post-truth: the Oxford English Dictionary word of the year 2016 is a paradox for artists and scientists in particular. Post-truth proposes that there has been such a thing as truth in the past. Responsible scientists and artists are – and always have been – on a lifelong journey, driven by curiosity to discover what is not apparent. One group specialized in reason, the other in emotion, they are searching for insights to help society make better informed decisions, knowing that they are only a small part of a truth-searching journey that will continue infinitely. And while scientists try to be as exact as possible, knowing that 100% certainty does not exist, artists strive for perfection all their lives, knowing that perfection does not exist. For both the journey must be the goal. Until recently, this understanding was a fundament on which society could progress. What post-truth really seems to get at is that definite black and white, simple solutions based on instinct are increasingly challenging the nature of science, which is based on ranges and probabilities that are built on knowledge and reason.

A still from the short film by Gloria Benedikt and Christian Felber ©Patrick Zadrobilek

Public discourse over the causes for this development has increased significantly over the past months, identifying information overload and the loss of gatekeepers due to the digital revolution which seems to be leading people to create their own realities or cognitive ease. I’m confident that many of the problems on the surface, such as the fake news phenomenon will be addressed and solved in the near future. But how can and should science respond and contribute to the underlying issue?

If we are to accept that the new dividing lines appear between ‘rational progressives’ and ‘emotional regressives;’ between those who focus inward and backward, attempting to reject forces of globalization and those who focus outward and forward, embracing the forces of globalization; between those who are overwhelmed by interconnectedness, seeking simple short term solutions, and those willing to work on sustainable long term solutions; between those employing fear and hatred versus those advocating complicated but hopeful solutions,

I believe we need to extend our mission from knowledge production to developing compelling narratives, conveying positive, hopeful solutions that enable people to envision a sustainable future with heart and mind and overcome fear along the way.

This is where artists and scientists can come together, combining their strengths right now: united by the quest to understand how the world works, scientists finding data, artists embedding them in meaning. The short film on post-truth, shown at the Science Ball, is a small step on that journey. It developed out of an artistic urge to respond to the current discourse, which only seemed to touch on the surface of a more fundamental development. To shed light into these depths and find a different response, scientists contributed their views on the issue. Then, there are findings you cannot express with words, and that’s where non-verbal communication comes in. Here the medium is dance.

“Dance is one of the most beautiful forms of cooperation. Verbal language is an inefficient, incomplete form of communication that is prone to misunderstandings. Completing it by the physical, sensual, emotional, intuitive and spiritual spheres will provide a more holistic form of communication,” the economist and dancer Christian Felber observed a while back. He thus was a perfect match in realizing this project. May it now inspire you the audience to contemplate (post) truth from a different angle and the potential of science marrying art along the way.

Watch the full film

Gloria Benedikt is Associate for Science and Art at the International Institute for Applied Systems Analysis (IIASA). She is a graduate of the Vienna State Opera Ballet School 01’ and Harvard University 13’.

This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.