On the economics of agricultural production* (original) (raw)

Managing ecosystem services for agriculture: Will landscape-scale management pay?

Ecological Economics, 2014

Agriculture's reliance on ecosystem services creates economic and ecological interdependencies between crop production and biodiversity. Interactions with mobile organisms are particularly complex because they depend on the spatial configuration of habitat at large scales. As such conserving habitat is likely to benefit multiple farmers whereas conservation costs are born individually, creating potential interdependencies among farmers. We explore under what conditions landscape-scale management of ecosystem services is likely to benefit farmers compared to managing them at the farm-scale. To do this we develop an agent-based model (ABM) to predict the landscape configuration emerging from farm-scale management under different conditions: initial landscape, crop and pollinator characteristics. As a benchmark, the landscape configuration from landscapescale management is derived through a global optimization procedure. Not only do we find that efficiency improves with landscape-scale management, but also that all farmers would benefit from it (given dependence of crop yields on ecosystem services). However, we also find that the individual incentives to avoid maintaining habitat on one's own land are relatively high; therefore creating conditions for a Prisoner's Dilemma-type problem. On the other hand we also demonstrate that an incentive-compatible contract exists that can promote efficient landscape management (by combining side-payments with fines for defection).

Economic Factors Affecting Diversified Farming Systems

Ecology and Society, 2013

In response to a shift toward specialization and mechanization during the 20th century, there has been momentum on the part of a vocal contingent of consumers, producers, researchers, and policy makers who call for a transition toward a new model of agriculture. This model employs fewer synthetic inputs, incorporates practices which enhance biodiversity and environmental services at local, regional, and global scales, and takes into account the social implications of production practices, market dynamics, and product mixes. Within this vision, diversified farming systems (DFS) have emerged as a model that incorporates functional biodiversity at multiple temporal and spatial scales to maintain ecosystem services critical to agricultural production. Our aim is to provide an economists' perspective on the factors which make diversified farming systems (DFS) economically attractive, or not-so-attractive, to farmers, and to discuss the potential for and roadblocks to widespread adoption. We focus on how a range of existing and emerging factors drive profitability and adoption of DFS. We believe that, in order for DFS to thrive, a number of structural changes are needed. These include: 1) public and private investment in the development of low-cost, practical technologies that reduce the costs of production in DFS, 2) support for and coordination of evolving markets for ecosystem services and products from DFS and 3) the elimination of subsidies and crop insurance programs that perpetuate the unsustainable production of staple crops. We suggest that subsidies and funding be directed, instead, toward points 1) and 2), as well as toward incentives for consumption of nutritious food.

Mismatch of Supply and Demand of Agricultural Land-Based Ecosystem Services

2019

Use and intensity has been the major factor that has influenced Ecosystem services. Spatial relationships have been the dependent factors that present the arising disparities between supply and demand. In this literary work we have catalogued these particular special relationships under six categories. This work also explores the relocation of resources to the affected groups. This article goes further and identifies the human contributions to service supply and transfer. The importance of cataloguing helps to create a distinction between “local” (demand and supply with in the requisite local), “proximity”(natural close transfer), “process”(distinct transfer by natural processes), ‘access’ (users can get to the ecosystem), ‘commodity’ (supply contributed and transfer carried out by market players), and ‘global’. In regards to the various circumstances, precise scientific methods and different policy methodologies are appropriate. One major question is in what way to deal with the ac...

Economic and ecological trade-offs of agricultural specialization at different spatial scales

Ecological Economics, 2016

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Ecosystem Services to Support the Diversification of Agricultural Production

Grassroots Journal of Natural Resources

The issue of diversification of the agricultural sector in the context of providing environmental, social and economic components is on the agenda of governments of many countries. Ecosystem services can form a powerful direction of agricultural development inculcating the sustainable development. A significant problem lies in the lack of ecosystem conservation, the lack of realization of ecosystem services, limited understanding of the nature of ecosystem services, and the lack of available statistics. Current research focuses on assessing the contribution of ecosystem services to entire cycle of a product and how it overcomes the business risks. As a result, new sources of income are foregone. That is why effective environmental management must take into account new income opportunities flowing in from various ecosystem services if conserved properly. This article is to identify possible areas for diversification of the agricultural sector in the context of ecosystem services. Som...

Foreword: The Economics of Rural and Agricultural Ecosystem Services: Purism versus Practicality

2013

Ecosystem goods and services (we henceforth refer to these solely as "services") have been de ined in general terms as the outputs of natural systems that bene it society (Daily 1997, Millennium Ecosystem Assessment 2005) or, more precisely, as "the lows from an ecosystem that are of relatively immediate bene it to humans and occur naturally" (Brown et al. 2007, p. 334). Economists have long recognized the capacity of natural systems to provide market and nonmarket bene its. Models to quantify these bene its have existed for decades (Krutilla 1967). The more recent concept of ecosystem services provides an alternative framework through which these values may be conceptualized and communicated. Among the factors that distinguish an ecosystem service framework from traditional economic analysis, at least in principle, is a more fundamental multidisciplinary focus, including an emphasis on both ecological production and economic value (Johnston et al. forthcoming, Wainger and Mazzotta 2011). The ecosystem service perspective also seeks to distinguish bene its provided by natural ecosystems from those provided by human capital, labor, and technology, thereby providing a more direct perspective on the bene its provided by natural systems (Bateman et al. 2011, Brown et al. 2007, Johnston and Russell 2011). One advantage of the ecosystem service framework is its resonance with noneconomists, including ecologists and others who study the biophysical processes through which ecosystems produce outcomes that are valued by society (Brown et al. 2007, Carpenter et al. 2009, Daily 1997). The framework provides a means by which to link changes in ecosystem processes and outputs to effects on social welfare, thereby facilitating cost-bene it analysis of policies and projects affecting natural systems (Wainger and Mazzotta 2011). Research in this area typically seeks to quantify tradeoffs and promote more ef icient

Rising farm costs, marginal land cropping, and ecosystem service markets

2021

A growing challenge with industrialized agriculture is compensating farmers for devoting land towards producing ecosystem services, at a time when global food demands are accelerating. Here, we explore revenue thresholds that Payment for Ecosystem Service programs (PES) must approach to be competitive in present-day crop markets, amalgamating long-term North American data especially from Canada on input costs, crop yields, crop revenues after expenses, government subsidies, and land use. Two trends suggest that PES markets with stable revenues can be increasingly competitive, with inflation-adjusted farm input costs now 50x higher than a century earlier and increasingly high revenue instability including net losses for some crops in some years. Since 1994, crop revenues in some regions have averaged 39acre−1US,peakingat39 acre− 1 US, peaking at 39acre−1US,peakingat412 but losing money 25.3% of time. Importantly, these data show how government subsidies have been a major stabilizing force, increasing revenues by 37.6% wh...