Economic Analysis and Policy Development To Support Multiple Social, Economic and Environmental Benefits Produced by Farms

View the project final report

• 1999 annual report

Commodities

• Agronomic: barley, corn, soybeans, sugarbeets, grass (misc. perennial), hay
• Fruits: apples, berries (other), plums, berries (strawberries)
• Additional Plants: native plants, trees
• Animals: bovine, poultry, swine, sheep, fish
• Animal Products: dairy

Practices

• Animal Production: grazing - continuous, manure management, grazing - rotational, feed/forage
• Crop Production: conservation tillage
• Education and Training: participatory research
• Farm Business Management: agricultural finance
• Natural Resources/Environment: biodiversity, habitat enhancement, indicators, wetlands, wildlife
• Production Systems: agroecosystems
• Soil Management: organic matter, soil analysis
• Sustainable Communities: infrastructure analysis, public participation, social capital

Different farming systems produce varying kinds and levels of environmental, social, and economic benefits. We compared estimated benefits produced by current and potential farming systems in two Minnesota watersheds, including lack of soil movement, water quality, greenhouse gas emissions, wildlife habitat, and institutional relationships. This project used contingent valuation and avoided costs methods to value selected non-market benefits. Based on the research, we developed recommendations for policy analysis and proposals that would reward farmers who produce public benefits on their farms. Major findings are documented in the appended Executive Summary.

Introduction:

1. Farming systems need to be diversified to meet national objectives relative to working landscapes. The dire links between agriculture, biodiversity, and national concerns such as the hypoxic zone in the Gulf of Mexico are increasingly documented. Nearly half of endangered species are threatened due to agriculture (Wilcove et al. 1998). Research has associated Midwestern farming with excessive nutrients in the Gulf (CAST 1999 and Randall et al. 1998). MacKay (2001) and others have written about the need to cultivate biodiversity through stewardship practices, and similarly, Altieri (1999) addresses the importance of the ecosystem that biodiversity supports in sustainable food systems. Scientists convened through the Mississippi Riverwise Partnership in December 2000 reached a consensus that society must design and implement more diversified agricultural systems in the Corn Belt and create strategically placed and functioning wetlands (Riverwise 2001). The adoption of landscape level changes as well as best management practices in corn and soybeans, are proposed by Mitch et al. (2001) and Randall (2001) among others. The Environmental Protection Agency has issued environmental goals of contaminant reduction that will require changes in the dominant farming systems (NOAA 2001).

2. Different farm policies are needed to achieve national objectives. There is a growing call for making stewardship incentives a primary component of farm policy. At a meeting sponsored by the Minnesota Board of Water and Soil Resources (BWSR) on farm bill policy in 2001, many thought we should create a feasible transition from existing commodity programs to a green payment program and that we should pay for the production of environmental goods and services (BWSR 2001). Similarly, meetings held by the Soil and Water Conservation Society (SWCS) found that participants see the need for "making stewardship a fundamental justification for public support of agriculture" (SWCS 2001). The Minnesota Department of Natural Resources (MN DNR 2001) and BSWR (MN BWSR 2001) each have issued recommendations in support of the concepts of the Conservation Security Plan (CSP), as has the International Association of Fish and Wildlife Agencies (Wildlife Management Institute 2001). A review of policies by the Economic Research Service concluded that much better coordination is needed between conservation and income support policies (ERS 2000).

The public is beginning to make its collective voice heard as consumers of agricultural products and as beneficiaries -- or not -- of management decisions. For example, the public increasingly wants to know more about their food and how it is produced (Meter et al. 2001). Being able to explain the actual benefits fosters a willingness to spend taxpayer dollars for stewardship (Welle 2001), and public involvement in agricultural policy has benefits for agriculture. For example, the Citizens Advisory Committee (MINNESOTA POLLUTION CONTROL AGENCY 1994) developed a range of proposals from river buffers that later became the Conservation Reserve Enhancement Program (CREP) initiative in Minnesota. A similar effort is underway in the southeast region of the state, where MBA Phase I results are being included in the justification for measured landscape scale efforts to slow erosion, nutrient, and farmer losses in the region. Some European countries are ahead of the United States with regard to citizen-derived stewardship policies and ways in which to measure their success (DeVries 2000 and Vorley 2001). For example, the French government supports "the multi-functional nature of agriculture" with Rural Farming Contracts between the state and a local commission that includes farmer commitments and regional priorities for land and water use, job creation, farm diversification, and biodiversity.


3. The literature is reviewed more extensively in a copy of the full project publication called "Multiple Benefits of Agriculture Project: An Economic Environmental and Social Analysis." It is available at the website: www.lanstewardshipproject.org/mba/mba.html.

A. Design a study that will measure the economic benefits produced in two Minnesota watersheds by agriculture specializing in cash grains or livestock, and integrated farming systems that produce both crops and livestock. The project will evaluate how public and private policies foster the production of multiple economic, social, and environmental benefits.

B. Calculate and compare the economic value of benefits from commodity-based production to that of integrated farming systems in two watersheds in Minnesota. This study will look beyond the economic value of commodities produced on these farms to consider non-market benefits with economic values that can be ascertained.

C. Analyze and evaluate selected policies at the national, state, and local levels for their ability to foster production of multiple benefits. Certain public policies in Europe have been designed to reward farmers for practicing what they call multifunctional agriculture. This study will look at U.S. policy options to encourage production of non-market benefits that could directly modify farming practices in these watersheds, if enacted. These could include policies related to the sequestration of carbon, the trading of nutrient credits, and flood retention of water quality regulations. Policies related to social and environmental consequences not tied to direct market values will be taken into account also.

D. Develop recommendations and disseminate information on the findings to at least 1,000 people. A compelling case needs to be made for why farmers adopt multifunctional sustainable agriculture changes and why policy makers should create such policies. We want to inform people in the North Central region and policy makers in our nation's capitol about the results of our work.

This project focused on evaluating selected economic, environmental and social benefits produced by a variety of farming systems as a basis for new policy proposals to promote the adoption of integrated farming systems. These new policies would help farmers better manage the risks in a transition to integrated, sustainable farming systems. We also addressed consumer willingness to pay for multiple benefits from farmland as a part of the project.