Abstract
Despite much rhetoric about the 'greening business' agenda and various initiatives to promote the valuation of ecosystem services and natural capital, the corporate sector has been slow to integrate social and environmental factors into core business models and to extend this integration across their supply chain. Our effort to narrow this thematic and methodological gap focuses on the co-benefits and positive externalities that can be generated through progressive knowledge exchange between a corporation and its suppliers. Using a case study of contract farming of malting barley in water scarce Rajasthan (India), we examine the extent to which best practice agronomic advice given by corporate farm extension workers can help small scale farmers (suppliers) to increase income, improve resource efficiency (water, fertiliser, energy) and reduce greenhouse gas emissions. Findings from our desk study suggest positive results for all these variables, when compared to the regional benchmark of non-participating farmers. Under a scenario where advice is provided on all major crops (not just barley), we find a significant further increase of farm income. Our valuation of the reduced exploitation of ground water (alone) exceeds the advisors' annual salaries, suggesting that under full social and environmental accounting, the extension services are not a cost factor, but a profit making unit of the company. We discuss of our findings in relation to alternative approaches to PES and alternative investment strategies in green technologies.
Highlights
There is a growing effort to involve businesses in the protection of the natural environment and the world’s ecosystems, from grand declarations to more practical reports focusing on the quantification and valuation of externalities produced by businesses and the ecosystem services which underpin business performance (World Business Council for Sustainable Development, 2011; Trucost and TEEB for Business 2013)
This study focuses on the Rabi system and the inputs and outputs produced from this system; the corresponding ecosystem services and natural capital externalities
Due to the high temporal variability in fodder prices seen in the region likely due to availability of fodder and the localised nature of markets, we considered data from data from Directorate of Marketing & Inspection (DMI), Ministry of Agriculture, Government of India4
Summary
There is a growing effort to involve businesses in the protection of the natural environment and the world’s ecosystems, from grand declarations (e.g. the UN ‘Natural Capital Declaration’ Mulder et al, 2013) to more practical reports focusing on the quantification and valuation of externalities produced by businesses and the ecosystem services which underpin business performance (World Business Council for Sustainable Development, 2011; Trucost and TEEB for Business 2013). The size differential means that companies can have huge leverage on farmers, dictating contracting arrangements that shape farming strategies and impact on the rural landscape and the ecosystem services it provides This leverage may increase even further in a developing country context, where farmers tend to have less access to capital, to agronomic advice and (due to poor infrastructure) to different markets and alternative buyers (e.g. Galt, 1997; Porter & Phillip-Howard 1994). In a contribution to narrowing this gap, this paper aims to assess, quantify and value the farming related externalities caused by a company’s extension services, using a case study from Rajasthan where small scale farmers were incentivised to start growing malting barley for a company’s regional processing plant It is a case of crop switching on existing agricultural land
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