Scott Swinton

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  • Agriculture as transformation function or multi-input, multi-output production function.
  • NB: USDA-NASS says Michigan corn-for-grain + soybean acreage = 4m in 2009.
  • Scott Swinton

    1. 1. Supply and Demand for Ecosystem Services from Agriculture Scott M. Swinton Michigan State University Agricultural, Food, and Resource Economics True Cost of Food workshop, London, December 4-5, 2013
    2. 2. Ecosystem services from agriculture come bundled together Services TO - Climate regulation - Water provision - Soil provision - Pollination - Pest regulation - Genetic diversity Disservices TO - Pests & diseases Swinton et al, Ecol Econ 2007 Farm Mgt: Supplemental inputs Enterprise choices AGRICULTURE (with Forestry & Aquaculture) Services FROM - Food & fiber - Aesthetics - Recreation - Carbon sequestration - Biodiversity conserv. Disservices FROM - Water pollution - Health risks from agrochemicals - Greenhouse gasses - Wildlife habitat loss
    3. 3. Environmental Values arise from supply and demand, analogous to markets  Demand   Supply   Willingness to pay for extra unit Cost to supply extra unit (“willingness to accept” payment) Economic value:   Demand=Supply Market “price” where all goods produced are sold source: wikipedia.org
    4. 4. Drivers of Supply (by Producers) & Demand (by Consumers) of Ecosystem Services  For farmer suppliers to provide more ES:     Direct cost (incl. equipment & resource base) Opportunity cost (foregone earnings) Environmental attitudes & information For consumers to demander more ES:   Income Environmental attitudes & information
    5. 5. Agriculture produces ES in bundles, but people experience them separately Ma, 2011
    6. 6. Supply & demand for crop system with most climate & lake benefits: Michigan, USA 2008-09 Payment (US$/acre) 100 Wheat added to corn-soya rotation. Agrochemicals cut by 1/3. Winter cover crop. 75 Farmer supply: Better stewardship Less GHG & eutrophic lakes 50 Resident demand: Less GHG & eutrophic lakes 25 0 0 Ma, 2011 2 1 Michigan Cropland (million acres) 3
    7. 7. Take-away messages  Farmers mostly willing to adopt practices that produce more ES.  Changed practices  Multiple ES  Citizens mostly willing to pay for less eutrophic lakes & less GHG emissions.  Equilibrium payment ~$45/acre ≈10% higher price at typical yields and prices.  Would change practices on 35-50% of Michigan corn-grain & soy land
    8. 8. Cautionary note  Environmental “costs” not constant; they depend on    Prices of agric products & inputs Citizen incomes Knowledge and attitudes

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