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Marketed Outputs And Non-Marketed Ecosystems Services

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  • Sauer, Johannes
  • Wossink, Ada

Abstract

We provide a new approach for assessing the cost of marginal ecosystem changes and the effectiveness of green payment schemes. The approach is based on a theoretical and empirical analysis of the bio-economic production interactions between marketed outputs and non-marketed ecosystem services at the micro level. To frame the economic nature of the problem, we employ a generalized joint production model in combination with cost minimization. The generalized joint production framework allows for the consideration of complementary, substitutive and competitive relationships between agricultural production and non-marketed ecosystem services generation and avoids double counting. From this theoretical model we distinguish three theoretical cases depending on the imposed minimum acceptable level of the non-marketed ecosystem services. We employ farm level panel data for the UK to empirically investigate these cases. More specifically, to represent and evaluate the production structure, we estimate first- and second-order elasticities derived from a flexible transformation function. Results show that the majority of farms produce agricultural output and ecosystem services in a complementary relationship. Generation of multiple ecosystem services on the same farm showed either a substitutive or competitive relationship. Changing the composition of the ecosystem services output would have very different implications for individual farms.

Suggested Citation

  • Sauer, Johannes & Wossink, Ada, 2010. "Marketed Outputs And Non-Marketed Ecosystems Services," 84th Annual Conference, March 29-31, 2010, Edinburgh, Scotland 91807, Agricultural Economics Society.
    • Handle: RePEc:ags:aesc10:91807
    DOI: 10.22004/ag.econ.91807
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    References listed on IDEAS

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    1. Dobbs, Thomas L. & Pretty, Jules, 2008. "Case study of agri-environmental payments: The United Kingdom," Ecological Economics, Elsevier, vol. 65(4), pages 765-775, May.
    2. de Koeijer, T. J. & Wossink, G. A. A. & van Ittersum, M. K. & Struik, P. C. & Renkema, J. A., 1999. "A conceptual model for analysing input-output coefficients in arable farming systems: from diagnosis towards design," Agricultural Systems, Elsevier, vol. 61(1), pages 33-44, July.
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    Cited by:

    1. Kanchanaroek, Yingluck & Aslam, Uzma, 2017. "Assessing Farmers’ Preferences To Participate In Agri-environment Policies In Thailand," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 260888, European Association of Agricultural Economists.
    2. Kanchanaroek, Yingluck & Aslam, Uzma, 2018. "Policy schemes for the transition to sustainable agriculture—Farmer preferences and spatial heterogeneity in northern Thailand," Land Use Policy, Elsevier, vol. 78(C), pages 227-235.
    3. Aslam, Uzma & Termansen, Mette & Fleskens, Luuk, 2017. "Investigating farmers’ preferences for alternative PES schemes for carbon sequestration in UK agroecosystems," Ecosystem Services, Elsevier, vol. 27(PA), pages 103-112.

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