Policy Challenges and Priorities for Internalizing the Externalities of Modern Agriculture

Abstract

Agriculture is inherently multifunctional. It jointly produces more than food, fibre or oil, having a profound impact on many elements of economies and ecosystems. A comprehensive framework is used to present new data on annual external costs in Germany ( 1.2 billion; US$2 billion), in the UK ( 2.3 billion; US$3.8 billion) and in the USA ( 21 billion; US$34.7 billion). These costs are equivalent to 49-208/ha (US$81-343/ha) of arable and grassland. Agriculture also produces positive externalities, and though there is no comprehensive valuation framework, the public benefits in the UK appear to be in the range of 10-30 (US$16-49) per household, or some 20-60/ha (US$32-100/ha) of arable and pasture land. These external costs and benefits raise important policy questions. In particular, should farmers receive public support for the multiple public benefits they produce? Should those that pollute have to pay for restoring the environment and human health? Policy options available for encouraging behavioural changes are of three types: advisory and institutional measures; regulatory and legal measures; and economic instruments. Three of the most promising options for discouraging negative externalities and encouraging positive ones are: (1) environmental taxes; (2) subsidy and incentive reform; and (3) institutional and participatory mechanisms. The greatest challenge, however, will be to find ways to integrate such policy tools into effective packages that will increase the supply of desired environmental and social goods whilst ensuring farmers' livelihoods remain sustainable.

Pesticide environmental accounting: a decision-making tool estimating external costs of pesticides

“…Beneficial [arthropod] effects) and reflect both the field rate EIQ combined with the recategorised distribution of externality estimates (€/kg of a.i.) from the accounting studies (summarised by Pretty et al 2001).…”

“…Economic data from the original studies (summarised in Pretty et al 2001) were updated for 2009/2010 prices using national treasury data and converted to Euros, where necessary, from an online historical exchange rate database (OANDA 2010). GDP per capita data (mean of IMF, World Bank and CIA Fact Book data) and % GDP from agriculture (EarthTrends 2010) were also updated.…”

“…These include research in the USA (Pimentel et al 1992;Pimentel 2005;Tegtmeier and Duffy 2004), in the UK (Pretty et al 2000) and in the UK, USA and Germany (Pretty et al 2001). However, these several accounting attempts have considered the combined costs of all pesticides for each country and not the costs of individual pesticides at a local scale (Leach and Mumford 2008).…”

Sustainability metrics for agri-food supply chains

“…3 Cost categories included: treating contaminated water, monitoring of pesticides, medical costs for treating pesticide poisonings, and costs associated with biodiversity loss (Pretty et al 2001). 4 Total kg of active pesticide ingredients used in the USA in the year 2001 (Pretty et al 2001). Due to data availability, the UK and Germany were not used in this calculation.…”

“…The external cost of a unit of nitrate from agricultural areas can depend on the weather conditions that influence its transport and on the exposure of humans and ecosystems to the pollutant (Van Grinsven et al 2013;Wick et al 2012). Attempts have been made to quantify the external costs of nitrate pollution by assessing the expenditures on drinking water treatment (Pretty et al 2000(Pretty et al , 2001Tegtmeier and Duffy 2004), and by estimating the economic damage associated with health impacts and ecosystem degradation (Van Grinsven et al 2013).…”