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Economic Evaluation of the Selected Ecologically Significant Element in Agriculture

Author

Listed:
  • Ivo Horák

    (Department of Finance, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic)

  • Petr Marada

    (Department of Agricultural, Food and Environmental Engineering, Faculty of AgriSciences, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic)

Abstract

Ecologically significant elements are essential not only for the development and quality of life in rural areas, but also for agricultural management. Services provided by these ecosystems ensure water retention in the landscape, a protection against erosion and an increase in biodiversity. In the context of current political debates, the importance and necessity of highlighting the value of ecologically significant elements is desirable from the farmer's point of view. This study inquires into costs and benefits while implementing a selected ecologically significant element - landscaping orchard in an agricultural area, taking into account not only the explicit benefits that could be marketed, but also the benefits floating from the ecosystem services. The case study found out that whilst complying with the general conditions to be able to apply for the State subsidies with the value of ecosystem services, the Net Present Value is positive for the given project. The monetary value of ecosystem services provided by the given landscaping orchard is estimated to be, according to Ecosystem Services Valuation Database (2020), 125 thous. CZK.year-1 per 1.6 ha. That is a considerable amount which should be noted not only by the farmers but also by the policy makers who should reconsider the subsidies for farmers and pay more attention to their financial needs.

Suggested Citation

  • Ivo Horák & Petr Marada, 2022. "Economic Evaluation of the Selected Ecologically Significant Element in Agriculture," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 70(4-5), pages 295-306.
    • Handle: RePEc:mup:actaun:2022.022
    DOI: 10.11118/actaun.2022.022
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    References listed on IDEAS

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    1. Braat, Leon C. & de Groot, Rudolf, 2012. "The ecosystem services agenda:bridging the worlds of natural science and economics, conservation and development, and public and private policy," Ecosystem Services, Elsevier, vol. 1(1), pages 4-15.
    2. Giles Atkinson & Susana Mourato, 2015. "Cost-Benefit Analysis and the Environment," OECD Environment Working Papers 97, OECD Publishing.
    3. Costanza, Robert & de Groot, Rudolf & Braat, Leon & Kubiszewski, Ida & Fioramonti, Lorenzo & Sutton, Paul & Farber, Steve & Grasso, Monica, 2017. "Twenty years of ecosystem services: How far have we come and how far do we still need to go?," Ecosystem Services, Elsevier, vol. 28(PA), pages 1-16.
    4. Costanza, Robert & d'Arge, Ralph & de Groot, Rudolf & Farber, Stephen & Grasso, Monica & Hannon, Bruce & Limburg, Karin & Naeem, Shahid & O'Neill, Robert V. & Paruelo, Jose, 1998. "The value of the world's ecosystem services and natural capital," Ecological Economics, Elsevier, vol. 25(1), pages 3-15, April.
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