Evaluation of environmental impacts of crop production: Zoltán SZABÓ Corvinus University of Budapest External impacts of an intensive farm and an ecofarm

Justification of agricultural subsidies lack of solid economic foundations, economic rationality environmental aspects need to be better backed up

Aim of the research holistic approach a technology-specific combined evaluation of all external environmental impacts of arable crop production at the level of individual farms (Hungary) Pretty et al., 2000; Tegtmeier and Duffy, 2004; Hartridge and Pearce, 2001 devise agricultural subsidies (economic incentives) according to the resulting values? there are several ways, ours is just one of them testing the methodology

Middle-Mezőföld, Hungary

Structure of the methods applied

Results the selection of the crop production technology resulted in marked differences external costs of the intensive agricultural technology were up to an order of magnitude higher than those of the organic farming technology great uncertainties (pesticide use and impact on biodiversity) environmentally-friendly farming technologies do bring benefits to society

Estimated external costs of the two farms, broken down by crops (HUF/ton of crops produced; at 2009 prices)

Which one of the following things would be more important to improve?

Main assumptions behind estimating minimal external costs unit cost of pesticide use is 6 Euros/kg (Rabl, 2006) aggregated WTP value derived from contingent valuation survey is applied for valuation of impacts on biodiversity ExternE GHG Low values (2 Euro/tCO2, 5659 Euro/tN2O) are used in estimating costs associated with greenhouse gas emissions

Estimated minimal external costs of the two farms, broken down by crops (HUF/ton of crops produced; at 2009 prices)

Estimated minimal external costs of the two farms, broken down by crops (HUF/ha; at 2009 prices)

External environmental cost estimates organic farmintensive farm aggregate external costs per hectare € € % of the average procurement price of crops 5%close to 50% minimum external costs per hectare € €

Conclusions for policy setting the methodology may be applied in other locations (or at national, European level) Pretty et al. (2000, p.131) results „highlight the need for policy reform, … a more fair and efficient use of these public resources would be achieved if policy sought more explicitly to internalise these external costs”. more comprehensive and methodologically improved research

CAP payments strong dependency from subsidies to what extent are these payments achieving their goal; what amounts of subsidies are justified; and for what purposes? first as well as second pillar (agri-environmental) payments rethinking the principles of subsidies? evaluation of environmental impacts (externalities): non-commodity outputs (multifunctional agriculture)

Thank you for your attention SZABÓ