Integrating the economic and environmental performance of agricultural systems: A demonstration using Farm Business Survey data and Farmscoper

Abstract

There is a continued need to monitor the environmental impacts of agricultural systems while also ensuring sufficient agricultural production. However, it can be difficult to collect relevant environmental data on a large enough number of farms and studies that do so often neglect to consider the financial drivers that ultimately determine many aspects of farm management and performance. This paper outlines a methodology for generating environmental indicators from the Farm Business Survey (FBS), an extensive annual economic survey of representative farms in England and Wales. Data were extracted from the FBS for a sample of East Anglian cereal farms and south western dairy farms and converted where necessary to use as inputs in ‘Farmscoper’; farm-level estimates of nitrate, phosphorus and sediment loadings and ammonia and greenhouse gas emissions were generated using the Farmscoper model. Nitrate losses to water, ammonia and greenhouse gas emissions were positively correlated with food energy production per unit area for both farm types; phosphorus loading was also correlated with food energy on the dairy farms. Environmental efficiency indicators, as measured by either total food energy or financial output per unit of negative environmental effect, were calculated; greenhouse gas emission efficiency (using either measure of agricultural output) and nitrate loading efficiency (using financial output) were positively correlated with profitability on cereal farms. No other environmental efficiency measures were significantly associated with farm profitability and none were significant on the dairy farms. These findings suggest that an improvement in economic performance can also improve environmental efficiency, but that this depends on the farm type and negative environmental externality in question. In a wider context, the augmentation of FBS-type data to generate additional environmental indicators can provide useful insights into ongoing research and policy issues around sustainable agricultural production.