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Aniol Esteban

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  • 1. Farming for public benefit UK case-study aniol.esteban@neweconomics.org www.neweconomics.org nef (new economics foundation)
  • 2. Two key messages “Sustainable food production makes economic sense” “Some types of farming / food production create value to society – others destroy it – which ones should we favour?”
  • 3. nef (new economics foundation) Working towards an economy which delivers high well-being and social justice within ecological limits The current economic model is inefficient delivering well-being returns per use of natural resources
  • 4. The standard model Growth Output Inputs Resources Labour
  • 5. The new model Output Input Resources e.g. economy Mediator Well-being
  • 6. The value of different professions
  • 7. The value of different professions Childcare workers Hospital cleaners Waste recycling workers Positive Value £7 to £12 of value per £1 paid City bankers Tax accountants Advertising executives Negative value -£7 to -£47 per £1 paid (Note: there’s diversity within the sectors. Can’t put everyone in same pot)
  • 8. The value of different fishing techniques Gillnet Trawling
  • 9. The value of different fishing techniques Gillnets Positive Value £865 of value per Tm of cod landed Trawlers Negative Value -£116 to -£1992 per Tm of cod landed
  • 10. The value of different fishing techniques Gillnets Positive Value £865 of value per Tm of cod landed Trawlers Negative Value -£116 to -£1992 per Tm of cod landed % of quota Subsidies Gillnets 1% £38/Tm landed Trawler 99% £216/Tm landed
  • 11. How does all this apply to the farming context?
  • 12. Agricultural systems are multifunctional ECONOMIC ENVIRONMENTAL SOCIAL             revenues operational costs annualised capital costs subsidies taxes profitability productivity tourism impact upstream/downstream impacts         GHG emissions - fuel - bovine methane - land use change - energy GHG capture - afforestation soil erosion nutrient run-off air pollution waste treatment biodiversity energy use/intensity diversification/crop rotation            visual landscape employment - quantity - quality skills/education local social capital - trust - community cohesion social services resilience/security animal welfare housing nutrition quality of life working conditions self-sufficiency cultural heritage
  • 13. Impacts with market values ECONOMIC ENVIRONMENTAL SOCIAL        revenues operational costs annualised capital costs subsidies taxes profitability productivity    visual landscape employment - quantity - quality     tourism impact upstream/downstream impacts skills/education local social capital - trust - community cohesion         social services resilience/security animal welfare housing nutrition quality of life working conditions self-sufficiency GHG emissions - fuel - bovine methane - land use change - energy  GHG capture - afforestation        soil erosion nutrient run-off air pollution waste treatment biodiversity energy use/intensity diversification/crop rotation
  • 14. Impacts: no market value but “easy” to monetise ECONOMIC ENVIRONMENTAL SOCIAL        revenues operational costs annualised capital costs subsidies taxes profitability productivity    visual landscape employment - quantity - quality     tourism impact upstream/downstream impacts skills/education local social capital - trust - community cohesion         social services resilience/security animal welfare housing nutrition quality of life working conditions self-sufficiency GHG emissions - fuel - bovine methane - land use change - energy  GHG capture - afforestation        soil erosion nutrient run-off air pollution waste treatment biodiversity energy use/intensity diversification/crop rotation
  • 15. Impacts: no market values and “hard” to monetise ECONOMIC ENVIRONMENTAL SOCIAL        revenues operational costs annualised capital costs subsidies taxes profitability productivity      tourism impact upstream/downstream impacts         GHG emissions - fuel - bovine methane - land use change - energy   GHG capture - afforestation  soil erosion  nutrient run-off  air pollution  waste treatment  biodiversity  energy use/intensity  diversification/crop rotation   visual landscape employment - quantity - quality skills/education local social capital - trust - community cohesion social services resilience/security animal welfare housing nutrition quality of life working conditions self-sufficiency cultural heritage
  • 16. Case study: UK farming business in terms of value to society
  • 17. net income (£/ha) 498 428 405 341 312 220 216 173 Cropping Non-organic Dairy Lowland grazing Organic Source: Farm Business Survey (2011-2012) Grazing in less favoured areas
  • 18. Malcolm Mconventional • 200 ha arable farm • Grows winter wheat • Uses 160 kg of artificial fertiliser (N) and 19.4 kg of farm yard manure (FYM) per hectare • Generates a net income of £428 / ha • Employs 4.38 workers (Full time equivalent)
  • 19. Oliver O’rganic • 200 ha arable farm • Grows winter wheat • Uses 97 kg of farm yard manure (FYM) • Generates a net income of £341 / ha • Employs 8,66 workers (Full time equivalent)
  • 20. net value (£/ha) £428 £341 Net income Conventional - carbon costs Organic - nitrogen costs
  • 21. net value (£/ha) £428 £395 £341 Net income Conventional £333 - carbon costs Organic - nitrogen costs
  • 22. net value (£/ha) £428 £395 £341 £333 £232 Net income Conventional - carbon costs Organic £259 - nitrogen costs
  • 23. Parameter Conventional Organic Net income + £428 + £341 Carbon costs - £33.1 - £8.12 Nitrogen costs - £162.8 - £74.2 Net value £232 / ha £259 / ha Carbon cost: £54 / Tm of CO2 eq Costs of Nitrogen (health) (environment) Nitrogen 64p / kg 25p / kg Farm Yard manure 83p / kg 25p / kg
  • 24. Employment: negative cost or positive externality? Option 1 (wages) Treat it both as cost and externality. If not employed they find another job. Value of 1 FTE = wage Option 2 (wages + added value) Treat as above + “additional” value of one less person unemployed. If not employed, X% chance to find job (depends on unemployment) Value of 1 FTE = wage + (wage * unemployment rate) Employing someone with small chance to get a job delivers additional value to nearly twice the value of the salary. Value of 1 FTE = wage + (wage * 97%)
  • 25. Employment: negative cost or positive externality? Wages Value of 1 FTE = £10,433 Wages + added value (wage * 7% unemployment rate) Value of 1 FTE = £11,163 Wages + added value (wage * 97%) Value of 1 FTE = £20,533
  • 26. net value (£/ha) including jobs £855 £742 £710 £477 £461 £534 £232 £259 Net value (income env costs) Conventional + wages + employment wellbeing (unemployment) Organic + employment wellbeing (20%)
  • 27. Valuing social related externalities – examples Social cohesion “ The value of increasing interaction with neighbours from once or twice a month to once or twice a week is around £23,000 p.a.” Amenity / local heritage “ For 1% increase in the area surrounding a house that is covered by ‘enclosed farmland’ the property has an additional value of £113 compared to the average house price.” Amenity / landscape “ Value of landscape amenity services by the agricultural sector is £488 million p.a. for the UK. An equivalent of £28/ha”
  • 28. Total Value What you can describe in monetary terms What you can capture in rents
  • 29. THANK YOU Reports available at: www.neweconomics.org Email: aniol.esteban@neweconomics.org Twitter: @nef

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