Assessing the economic consequences of sustainability in agriculture

Abstract

In many developed economies, the mainly non-agricultural population shows concern for the management of the rural environment and there is increasing interest in the concept of sustainability. Public pressure manifests itself in many ways, including the demand for adjustments to agricultural support systems which may include elements of cross-compliance or modifications to the economics of farming systems, which in turn lead managers to reduce inputs. Better knowledge on the part of such managers in relation to the complexities of the environmental management of their crops may allow them to maintain gross margins at reduced levels of inputs and yields. Such changes, whilst maintaining farm incomes, may reduce the demand for inputs, including labour. Research results tend to be location-specific so, with highly variable ecologies across regions, it is very difficult to forecast the regional economic impacts of the adoption of sustainable systems. At the national level, aggregate reductions in the production of some commodities would assist in the achievement of the GATT agreements to reduce subsidised exports. There may also be changes to the comparative advantage of different regions across Europe.