The 100% Organic Agriculture Policy in Bhutan – A gift or a curse?

Organic agriculture is considered an environment-friendly agricultural system and thus one strategy to make agriculture more sustainable. Bhutan has embraced the ambitious goal of becoming the world’s first 100% organic nation by 2020. Effects of such large-scale conversions at the national level have been rarely studied, particularly in cases of genuine pursued policies. Analysing recent on-farm data in Bhutan we find organic crop yields on average to be 19.1% lower than conventional yields. Based on these yield gaps, we assess the effects of a 100% conversion policy employing an economy-wide model with detailed representation of Bhutan’s agricultural sector incorporating agroecological zones, crop nutrients and field operations. Despite Bhutan’s low dependency on conventional inputs, we find significant welfare losses, particularly for non-agricultural households. The yield gap is the main driver for a strong decline in agricultural output (13.5%). Food supply is largely compensated by increased food imports, which results in a weakening of the country’s cereal self-sufficiency (9.4%). Nitrogen availability declines strongly (22.2%), underlining the need of improved soil-fertility practices e.g. biological fixation of nitrogen. Our results show no benefits for rural labour markets as agricultural wages decrease (1.3%), despite higher labour intensity. The study further highlights policy implications and areas of future research.