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The Influence of Biodiversity Provision on the Cost Structure of Swedish Dairy Farming

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  • Joakim Gullstrand
  • Rembert Blander
  • Staffan Waldo

Abstract

type="main" xml:id="jage12028-abs-0001"> Multi-functionality and the provision of eco-system services are politically highly prioritised aspects of farming. This study uses a Symmetric Generalised McFadden cost function to analyze the relationship between costs of production and the provision of biodiversity for Swedish milk farms. Biodiversity indicators are based on the number of valuable plant species present at the farm and are modeled as an output in the cost function. The results show that the marginal cost of biodiversity increases with higher provision, and that an increased provision of biodiversity also increases the costs of market commodities such as milk and beef. The upward slope of the marginal cost of biodiversity and its competitive relationship with market goods questions the efficiency of support schemes based on voluntary programmes with a flat-rate per hectare compensation. Instead, the results support targeted environmental policy schemes with zonings and/or the use of biodiversity indicators.

Suggested Citation

  • Joakim Gullstrand & Rembert Blander & Staffan Waldo, 2014. "The Influence of Biodiversity Provision on the Cost Structure of Swedish Dairy Farming," Journal of Agricultural Economics, Wiley Blackwell, vol. 65(1), pages 87-111, January.
    • Handle: RePEc:bla:jageco:v:65:y:2014:i:1:p:87-111
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    File URL: http://hdl.handle.net/10.1111/jage.2014.65.issue-1
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    Cited by:

    1. Zdenka ZAKOVA KROUPOVA, 2016. "Profitability development of Czech dairy farms," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 62(6), pages 269-279.
    2. Lambini, Cosmas Kombat & Nguyen, Trung Thanh & Abildtrup, Jens & Pham, Van Dien & Tenhunen, John & Garcia, Serge, 2018. "Are Ecosystem Services Complementary or Competitive? An Econometric Analysis of Cost Functions of Private Forests in Vietnam," Ecological Economics, Elsevier, vol. 147(C), pages 343-352.
    3. Tsakiridis, Andreas & Hanrahan, Kevin & Breen, James & Wallace, Michael & O’Donoghuea, Cathal, 2016. "Feed substitution and economies of scale in Irish beef production systems," 149th Seminar, October 27-28, 2016, Rennes, France 244769, European Association of Agricultural Economists.

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