Aniol Esteban
29
Farming for public benefit UK case-study [email protected] www.neweconomics.org nef (new economics foundation)
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Transcript of Aniol Esteban
Farming for public benefit
UK case-study
www.neweconomics.org
nef (new economics foundation)
Two key messages
“Sustainable food production makes
economic sense”
“Some types of farming / food
production create value to society –
others destroy it – which ones
should we favour?”
Working towards an economy
which delivers
high well-being and social justice
within ecological limits
nef (new economics foundation)
The current economic model is inefficient
delivering well-being returns per use of
natural resources
Inputs
Output
The standard model
Resources Labour
Growth
The new model
Resources
Input
Well-being
Output
e.g. economy
Mediator
The value of different professions
The value of different professions
Childcare workers Positive Value
Hospital cleaners £7 to £12 of value per £1 paid
Waste recycling workers
City bankers Negative value
Tax accountants -£7 to -£47 per £1 paid
Advertising executives
(Note: there’s diversity within the sectors. Can’t put everyone in same pot)
The value of different fishing techniques
Gillnet Trawling
The value of different fishing techniques
Positive Value
Gillnets £865 of value
per Tm of cod landed
Negative Value
Trawlers -£116 to -£1992
per Tm of cod landed
The value of different fishing techniques
Positive Value
Gillnets £865 of value per Tm of cod landed
Negative Value
Trawlers -£116 to -£1992 per Tm of cod landed
% of quota Subsidies
Gillnets 1% £38/Tm landed
Trawler 99% £216/Tm landed
How does all this apply to
the farming context?
ECONOMIC ENVIRONMENTAL SOCIAL
revenues
operational costs
annualised capital costs
subsidies
taxes
profitability
productivity
tourism impact
upstream/downstream
impacts
GHG emissions
- fuel
- bovine methane
- land use change
- energy
GHG capture
- afforestation
soil erosion
nutrient run-off
air pollution
waste treatment
biodiversity
energy use/intensity
diversification/crop rotation
visual landscape
employment
- quantity
- quality
skills/education
local social capital
- trust
- community cohesion
social services
resilience/security
animal welfare
housing
nutrition
quality of life
working conditions
self-sufficiency
cultural heritage
Agricultural systems are multifunctional
ECONOMIC ENVIRONMENTAL SOCIAL
revenues
operational costs
annualised capital costs
subsidies
taxes
profitability
productivity
tourism impact
upstream/downstream
impacts
GHG emissions
- fuel
- bovine methane
- land use change
- energy
GHG capture
- afforestation
soil erosion
nutrient run-off
air pollution
waste treatment
biodiversity
energy use/intensity
diversification/crop rotation
visual landscape
employment
- quantity
- quality
skills/education
local social capital
- trust
- community cohesion
social services
resilience/security
animal welfare
housing
nutrition
quality of life
working conditions
self-sufficiency
Impacts with market values
ECONOMIC ENVIRONMENTAL SOCIAL
revenues
operational costs
annualised capital costs
subsidies
taxes
profitability
productivity
tourism impact
upstream/downstream
impacts
GHG emissions
- fuel
- bovine methane
- land use change
- energy
GHG capture
- afforestation
soil erosion
nutrient run-off
air pollution
waste treatment
biodiversity
energy use/intensity
diversification/crop rotation
visual landscape
employment
- quantity
- quality
skills/education
local social capital
- trust
- community cohesion
social services
resilience/security
animal welfare
housing
nutrition
quality of life
working conditions
self-sufficiency
Impacts: no market value but “easy” to monetise
ECONOMIC ENVIRONMENTAL SOCIAL
revenues
operational costs
annualised capital costs
subsidies
taxes
profitability
productivity
tourism impact
upstream/downstream
impacts
GHG emissions
- fuel
- bovine methane
- land use change
- energy
GHG capture
- afforestation
soil erosion
nutrient run-off
air pollution
waste treatment
biodiversity
energy use/intensity
diversification/crop rotation
visual landscape
employment
- quantity
- quality
skills/education
local social capital
- trust
- community cohesion
social services
resilience/security
animal welfare
housing
nutrition
quality of life
working conditions
self-sufficiency
cultural heritage
Impacts: no market values and “hard” to monetise
Case study: UK farming business in
terms of value to society
428
498
220 173
341
405
216
312
Cropping Dairy Lowland grazing Grazing in lessfavoured areas
Non-organic
Organic
net income (£/ha)
Source: Farm Business Survey (2011-2012)
Malcolm Mconventional
• 200 ha arable farm
• Grows winter wheat
• Uses 160 kg of artificial fertiliser (N) and 19.4 kg of farm
yard manure (FYM) per hectare
• Generates a net income of £428 / ha
• Employs 4.38 workers (Full time equivalent)
Oliver O’rganic
• 200 ha arable farm
• Grows winter wheat
• Uses 97 kg of farm yard manure (FYM)
• Generates a net income of £341 / ha
• Employs 8,66 workers (Full time equivalent)
Conventional
Organic
net value (£/ha)
£428
£341
Net income - carbon costs - nitrogen costs
Conventional
Organic
net value (£/ha)
£428 £395
£341 £333
Net income - carbon costs - nitrogen costs
Conventional
Organic
net value (£/ha)
£428 £395
£232
£341 £333
£259
Net income - carbon costs - nitrogen costs
Parameter Conventional Organic
Net income + £428 + £341
Carbon costs - £33.1 - £8.12
Nitrogen costs - £162.8 - £74.2
Net value £232 / ha £259 / ha
Carbon cost: £54 / Tm of CO2 eq
Costs of Nitrogen (health) (environment)
Nitrogen 64p / kg 25p / kg
Farm Yard manure 83p / kg 25p / kg
Employment: negative cost or positive externality?
Option 1 (wages)
Treat it both as cost and externality.
If not employed they find another job.
Value of 1 FTE = wage
Option 2 (wages + added value)
Treat as above + “additional” value of one less person unemployed.
If not employed, X% chance to find job (depends on unemployment)
Value of 1 FTE = wage + (wage * unemployment rate)
Employing someone with small chance to get a job delivers additional
value to nearly twice the value of the salary.
Value of 1 FTE = wage + (wage * 97%)
Employment: negative cost or positive externality?
Wages
Value of 1 FTE = £10,433
Wages + added value (wage * 7% unemployment rate)
Value of 1 FTE = £11,163
Wages + added value (wage * 97%)
Value of 1 FTE = £20,533
Conventional
Organic
net value (£/ha) including jobs
£232
£461 £477 £534
£259
£710 £742
£855
Net value (income -env costs)
+ wages + employmentwellbeing
(unemployment)
+ employmentwellbeing (20%)
Valuing social related externalities – examples
Social cohesion
“ The value of increasing interaction with neighbours from once or twice
a month to once or twice a week is around £23,000 p.a.”
Amenity / local heritage
“ For 1% increase in the area surrounding a house that is covered by
‘enclosed farmland’ the property has an additional value of £113
compared to the average house price.”
Amenity / landscape
“ Value of landscape amenity services by the agricultural sector is £488
million p.a. for the UK. An equivalent of £28/ha”
What you can capture in rents
Total Value
What you can describe in monetary terms
