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Economies of Scope in the Agricultural Provision of Ecosystem Services: An Application to a High Cost Production Region

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  • Huber, Robert
  • Lehmann, Bernard
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    Abstract

    Joint production of agriculture commodities and environmental goods and services is a key attribute of multifunctionality. However, complex natural and economic interactions make a sound analysis difficult. In this regard, the concept of economies of scope provides a simple policy oriented indicator of jointness. Thus, the existence of economies of scope can be regarded as a precondition for the implementation of agricultural policies with respect to environmental goods and services. We apply the concept of economies of scope to the provision of ecosystem services in the Swiss lowlands using a spatially explicit economic-ecological programming model. Thereby, the consideration of non-agricultural competitors in the provision of ecosystem services allows a simultaneous assessment of economies of scope. A cost-effectiveness analysis shows the leastcost supplier of ecosystem services and spatial patterns in the supply for these services. Results imply the existence of economies of scope and hence strong jointness between agricultural production and the provision of ecosystem services. However, the potential for public cost savings due to structural change in agriculture is considerable. Moreover, the development of the second generation in biomass conversion technologies may enhance a non-agricultural provision of these services. Therefore, a continuous improvement in agricultural production efficiency is a precondition for strong jointness and thus multifunctionality. Die Koppelproduktion (jointness) ist ein zentrales Element im Konzept der Multifunktionalität. Komplexe ökonomische und ökologische Zusammenhänge erschweren jedoch deren sorgfältige Analyse. Das Konzept der Verbundeffekte (economies of scope) kann jedoch als Indikator für die Koppelproduktion dienen. Das Vorhandensein dieser Verbundeffekten kann als Voraussetzung für die Implementierung von Politikmaßnahmen zur Bereitstellung von Umweltleistungen betrachtet werden. Der vorliegende Artikel untersucht, ob die Landwirtschaft in der Bereitstellung von Ökosystemleistungen Verbundeffekte aufweist. Mit Hilfe eines räumlich expliziten Optimierungsmodells wird die landwirtschaftliche Nutzung von Flächen einer industriellen Erzeugung von Energie auf denselben Flächen gegenübergestellt. Eine entsprechende Kosten-Effektivitätsanalyse zeigt den kostengünstigeren Anbieter von Ökosystemleistungen und ein räumliches Muster im Angebot derselben. Die Resultate zeigen, dass die Landwirtschaft über Verbundeffekte verfügt. Der im Modell implementierte Strukturwandel in der Landwirtschaft impliziert jedoch im Vergleich zur bestehenden Situation ein großes Einsparungspotenzial für zielgerichtete Direktzahlungen. Da die Entwicklung von Bioraffinerien der zweiten Generation diese Verhältnisse verschieben könnten, ist eine möglichst effiziente Landwirtschaft eine Voraussetzung für Verbundeffekte und damit auch für eine multifunktionale Landwirtschaft.

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    Bibliographic Info

    Article provided by Journal of International Agricultural Trade and Development in its journal Journal of International Agricultural Trade and Development.

    Volume (Year): 59 (2010)
    Issue (Month): 2 ()
    Pages:

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    Handle: RePEc:ags:joiatd:145225

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    Web page: http://www.ndsu.nodak.edu/ndsu/miljkovi/

    Related research

    Keywords: economies of scope; strong jointness; ecosystem services; economic-ecological programming model; Verbundeffekte; jointness; Ökosystemleistungen; räumlich explizites Optimierungsmodell; Agricultural and Food Policy; Environmental Economics and Policy; Production Economics; Resource /Energy Economics and Policy;

    References

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    1. Rolf Jens Brunstad & Ivar Gaasland & Erling Vardal, 2005. "Multifunctionality of agriculture: an inquiry into the complementarity between landscape preservation and food security," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 32(4), pages 469-488, December.
    2. Havlik, Petr & Bamiere, Laure & Jacquet, Florence & Millet, Guy, 2008. "Spatially explicit farming system modelling for an efficient agri-environmental policy design," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6676, European Association of Agricultural Economists.
    3. Robert M. Wolcott, 2006. "Prospects for Ecosystem Services in the Future Agricultural Economy: Reflections of a Policy Hand," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(5), pages 1181-1183.
    4. de Groot, Rudolf S. & Wilson, Matthew A. & Boumans, Roelof M. J., 2002. "A typology for the classification, description and valuation of ecosystem functions, goods and services," Ecological Economics, Elsevier, vol. 41(3), pages 393-408, June.
    5. Fraser, Rob W., 2008. "Land Heterogeneity, Agricultural Income Forgone and Environmental Benefit: An Assessment of Incentive Compatibility Problems in Environmental Stewardship Schemes," 82nd Annual Conference, March 31 - April 2, 2008, Royal Agricultural College, Cirencester, UK 36850, Agricultural Economics Society.
    6. Jack Peerlings, 2004. "Wildlife and landscape services production in Dutch dairy farming; jointness and transaction costs," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(4), pages 427-449, December.
    7. David R. Harvey, 2003. "Agri-environmental Relationships and Multi-functionality: Further Considerations," The World Economy, Wiley Blackwell, vol. 26(5), pages 705-725, 05.
    8. John M. Antle & Jetse J. Stoorvogel, 2006. "Predicting the Supply of Ecosystem Services from Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(5), pages 1174-1180.
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