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

1999 Annual Report for LNC99-146

Project Type: Research and Education
Funds awarded in 1999: $92,840.00
Projected End Date: 12/31/2001
Matching Non-Federal Funds: $405,000.00
Region: North Central
State: Minnesota
Project Coordinator:
Mara Krinke
Land Stewardship Project
George Boody
Land Stewardship Project

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


Four overall objectives are defined with SARE funding focusing on Objectives 3 and 4:

1) 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. This will be a complex study that involves a scoping process, which is now in process.

2) Calculate and compare the economic value of benefits from commodity-based production to that of integrated farming systems in the 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.

3) 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 or water quality regulations. Policies related to social and environmental consequences not tied to direct market values will be taken into account also.

4) 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.

Farming systems can produce more than commodities. They can produce multiple environmental and social benefits, such as flood management, improved water quality, scenic landscapes and economic and social resources in rural communities. This project will compare selected net environmental and social benefits from commodity-based and integrated farming systems in two watersheds in Minnesota. The Minnesota Legislative Commission on Minnesota Resources (LCMR) has voted preliminary approval of funds to calculate economic values for selected non-market benefits. The Joyce Foundation has given funds to conduct a scoping phase. Funds from SARE will help integrate policy analysis into the study, evaluate policy options and disseminate project results.

The Land Stewardship Project has convened an interdisciplinary and multi-perspective 11-member Core Working Group with members chosen to represent a range of specialties (i.e., ecosystem function, resource economics) and perspectives (i.e., farmers, agency staff, academics, non-profits). This group met with other experts in a scoping session in January 1999. A seven-member Technical Advisory Committee has been assembled to provide critical feedback on choice of methodologies, selection of models, policy development and interpretation of results. Local Watershed Advisory Councils will be organized in two study watersheds and will help characterize existing farming systems in the watersheds. These groups will also help develop integrated farming system scenarios and evaluate environmental and social benefits.

Policy proposals will be developed with the assistance of the watershed advisory groups. We will examine the relevance of European-style policies designed to reward farmers for adopting multifunctional agriculture, as well as other types of policies. A variety of dissemination strategies will be used including presentations, publications, and electronic methods.

We are reaching completion of many key components of the work. We have: characterized existing land use; developed scenarios of future production systems for analysis; recruited a National Policy Group; and disseminated project information to over 1000 people. Our estimates for the different levels of benefits that result from diversified farming systems are still preliminary. However, these accomplishments are allowing us to focus on policy recommendations.

Several organizations have contacted us seeking to use our methodology and results to develop new projects or shape existing projects. The results will also inform the upcoming farm bill debate and can lend insight to continuing discussion about he Conservation Security Act and other policies. We are looking at the potential for results-based measurement as a way to reward farmers based on public goods. We expect that the concept of multiple benefits from agriculture will be built into upcoming farm policy debates.


Frances Homans
Assitant Professor
University of Minnesota, Department of Applied Eco
231 Classroom Office Building
1994 Buford Avenue
St. Paul, MN 55108
Office Phone: 6126256220
Dr. Steve Light
Institute for Agriculture and Trade Policy
2105 1st Ave. S.
Minneapolis, MN 55404
Office Phone: 6128703474
Dr. Patrick Welle
Bemidji State University, Department of Economics
Decker Hall Room 20
1500 Birchmont Drive
Bemidji, MN 56601
Office Phone: 2187553873
Larry Gates

MN 55906