A warmer and drier climate has been projected in Australia especially for the inner part of Australia (CSIRO, 2007) which covers the cotton production regions. This change will have significant implications for the sustainable development of the cotton industry, as it is highly sensitive to climate and relies heavily on water for irrigation. To better address the challenges and opportunities of future climate change in the cotton industry, local climate change including changes in the mean climate, climate variability, and resultant water availability needs to be understood, its impacts need to be quantified, and effective and economical adaptation options need to be identified. Given the resilience of cotton production to current climate variability, the context of this existing resilience also needs to be assessed in a changing climate.

Atmospheric C02 and water are fundamental substances for crops to synthesis carbohydrate. Climate is the major driving force of crop production systems. Even though most cotton production in Australia is under irrigated conditions, water is a precious and costly resource for irrigated farming system and dependent on rainfall amount and pattern. Greenhouse gas induced climate change will inevitably impact on cotton production. It has been projected that annual temperature over inland Australian including the cotton production regions will increase l to l .2°C and annual rainfall will decrease 2-5% for the period 2020-2040 (CSIRO, 2007). This will have significant implications for the cotton industry. For example, increase in temperature will increase water use and the frequency of exceeding critical temperature thresholds, which will adversely impact on cotton growth, boll production, fibre quality and resultant farm profitability. A drier environment means less rainfall on average or more frequent and severe droughts placing increased pressure on precious water resources. Even though increased atmospheric CO, concentration have some positive effects on cotton production, these effects are constrained or impacted by high temperature, soil water and nutrient conditions (Bange et al., 2009). For cotton industry to continue to thrive into the future, there is a strategic need to quantify the combined impacts of changes in temperature, rainfall, water availability and atmospheric C02 concentration on cotton production, and to identify and evaluate existing and potential adaptation options in dealing with projected negative impacts and in capitalising the potential growth opportunities of climate change.