Supply and Demand for Ecosystem Services from Agriculture Scott M. Swinton Michigan State University Agricultural, Food, and Resource Economics True Cost of Food workshop, London, December 4-5, 2013
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Supply and Demand for Ecosystem Services from Agriculture
Scott M. SwintonMichigan State University
Agricultural, Food, and Resource Economics
True Cost of Food workshop, London, December 4-5, 2013
Ecosystem services from agriculture come bundled together
AGRICULTURE(with Forestry &Aquaculture)
Services TO - Climate regulation - Water provision - Soil provision - Pollination - Pest regulation - Genetic diversity
Disservices TO - Pests & diseases
Services FROM - Food & fiber - Aesthetics - Recreation - Carbon sequestration - Biodiversity conserv.
Disservices FROM - Water pollution - Health risks from agrochemicals - Greenhouse gasses - Wildlife habitat loss
Swinton et al, Ecol Econ 2007
Farm Mgt:Supplemental inputsEnterprise choices
Environmental Values arise from supply and demand, analogous to markets
Demand Willingness to pay for
extra unit Supply
Cost to supply extra unit (“willingness to accept” payment)
Economic value: Demand=Supply Market “price” where all
goods produced are sold source: wikipedia.org
Drivers of Supply (by Producers) & Demand (by Consumers) of Ecosystem Services
For farmer suppliers to provide more ES: Direct cost (incl. equipment & resource base) Opportunity cost (foregone earnings) Environmental attitudes & information
For consumers to demander more ES: Income Environmental attitudes & information
Agriculture produces ES in bundles, but people experience them separately
Ma, 2011
Supply & demand for crop system with most climate & lake benefits: Michigan, USA 2008-09
Ma, 2011Michigan Cropland (million acres)
0 1 2 3
Paym
en
t (U
S$/a
cre
)
0
25
75
100
50
Farmer supply: Better stewardship Less GHG & eutrophic lakes
Resident demand: Less GHG & eutrophic lakes
Wheat added to corn-soya rotation.Agrochemicals cut by 1/3.Winter cover crop.
Take-away messages Farmers mostly willing to adopt practices
that produce more ES. Changed practices Multiple ES
Citizens mostly willing to pay for less eutrophic lakes & less GHG emissions.
Equilibrium payment ~$45/acre ≈10% higher price at typical yields and prices. Would change practices on 35-50% of Michigan
corn-grain & soy land
Cautionary note Environmental “costs” not constant; they
depend on Prices of agric products & inputs Citizen incomes Knowledge and attitudes
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