Exploring the commodification of biodiversity using olive oil producers’ willingness to accept

Abstract

There is a growing need for innovative new instruments to complement the current schemes aimed at improving farmland biodiversity. Some of the most promising innovations include market-based instruments relying on what is known as the commodification of biodiversity. This paper aims to estimate the compensation farmers would need to receive in order to adopt environmentally-friendly practices aimed at incorporating the provision of biodiversity into food production. The analysis relies on a discrete choice experiment (DCE) that estimates farmers’ willingness to accept (WTA), both in terms of harvest (i.e. €/kg of output) and area (i.e. €/ha), for improving the levels of bird biodiversity in olive groves. The analysis focuses on a case study of mountain olive growers in Andalusia (Southern Spain). Results show that the higher the level of provision of farmland biodiversity, the higher the farmers’ WTA. Harvest-based estimates range from 0.185 €/kg to 1.395 €/kg olive oil for levels of provision of 13 and 30 bird-species/farm, respectively, meaning 58.5 €/ha to 440.0 €/ha in area-based terms. High-yield farms show higher WTA values compared to low-yield farms, with the exception of harvest-based estimates for the least stringent scenario. Taking into account the average farm-gate prices of both regular and organic extra virgin olive oil, the results suggest a great potential for the commodification of biodiversity through olive oil markets. However, further research is needed on the implementation of hybrid governance solutions including market-based and incentive-based instruments.