Incorporating the environment in agricultural productivity: applying advances in international environmental accounting

In light of the ongoing realities of climate change and the increasing demand for food around the world, understanding the capacity of the environment to support agricultural production is of upmost concern. A priori, it is hard to deny that both ecological and economic factors are relevant in measuring capacity. However, most current measures of agricultural productivity, particularly at economy-wide level, either exclude ecological factors or consider only specific flows, such as nitrogen balances or greenhouse gas emissions. This chapter proposes a way forward to support more integrated policy responses by building on advances in the measurement of natural capital and environmental assets encapsulated in the recent international standard, the System of Environmental-Economic Accounting (SEEA) – specifically ecosystem accounting. For agriculture, the enhancement to apply ecosystem accounting principles allows for the incorporation of the changing quality of agricultural land and the use of ecosystem services in standard growth accounting measures, and hence the derivation of environmentally adjusted agricultural productivity measures.