Aniol Esteban

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Aniol Esteban

  1. 1. Farming for public benefit UK case-study aniol.esteban@neweconomics.org www.neweconomics.org nef (new economics foundation)
  2. 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. 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. 4. The standard model Growth Output Inputs Resources Labour
  5. 5. The new model Output Input Resources e.g. economy Mediator Well-being
  6. 6. The value of different professions
  7. 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. 8. The value of different fishing techniques Gillnet Trawling
  9. 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. 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. 11. How does all this apply to the farming context?
  12. 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. 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. 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. 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. 16. Case study: UK farming business in terms of value to society
  17. 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. 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. 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. 20. net value (£/ha) £428 £341 Net income Conventional - carbon costs Organic - nitrogen costs
  21. 21. net value (£/ha) £428 £395 £341 Net income Conventional £333 - carbon costs Organic - nitrogen costs
  22. 22. net value (£/ha) £428 £395 £341 £333 £232 Net income Conventional - carbon costs Organic £259 - nitrogen costs
  23. 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. 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. 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. 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. 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. 28. Total Value What you can describe in monetary terms What you can capture in rents
  29. 29. THANK YOU Reports available at: www.neweconomics.org Email: aniol.esteban@neweconomics.org Twitter: @nef

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