Internalizing externalities through net ecosystem service analysis–A case study of greenhouse vegetable farms in Beijing

Abstract

One of the causes for market failure is that product externalities are not internalized into product prices. A method was put forward to internalize the externalities into the prices of agro-products, both positive (ecosystem services (ESs)) and negative (ecosystem disservices (EDSs)) externalities generated from agroecosystems were integrated into the calculation of net ecosystem service (NES) through monetary analysis. The case study of greenhouse vegetable production was carried out in conventional (CON), organic (ORG), and community-supported agriculture (CSA) farms in Beijing suburbs. The total ESs value (124 thousand USD ha−1 yr−1) of CSA farms was the highest. The total EDSs value (28.1 thousand USD ha−1 yr−1) of CON farms was the highest, and was 21 and 35 times of ORG and CSA farms, respectively. Pesticides contributed to 76% EDS value of CON farms. The NES values (without provisional ES) of CON, ORG and CSA farms were −25.4, 2.69, and 8.35 thousand USD ha−1 yr−1, respectively. The full prices of ORG (3.45 USD kg−1) and CSA (4.65 USD kg−1) vegetables were higher than those of CON (1.50 USD kg−1) vegetables. The market price of CON vegetables did not cover their value of net-negative externalities. The methodology of NES can be applied to comprehensively evaluate environmental sustainability, set fair prices for eco-friendly products, and provide a reference for eco-compensation. Further studies should be conducted, sampling more farms of different agroecosystems in different regions to test its applicability and practicality to provide substantial data for its broader application.