This document discusses farming for public benefit using a UK case study. It summarizes that sustainable food production makes economic sense and some farming techniques create value for society while others destroy value. It then examines the economic, environmental and social values of different farming techniques like conventional versus organic wheat growing. When factors like carbon costs, nitrogen costs and employment are accounted for, organic farming is shown to have a higher net value per hectare than conventional farming. The document advocates using a framework that values the multifunctional impacts of agriculture beyond just economic measures.

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
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

revenues
operational costs
annualised capital costs
subsidies
taxes
profitability
productivity
tourism impact
upstream/downstream
impacts

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





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
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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

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
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


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

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




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
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

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