1. Dpt of Food Business, University College Cork, Ireland
Farming & the Delivery of Public Goods
Prof. Thia Hennessy
Dpt of Food Business, University College Cork, Ireland

2. Overview Agriculture an important sector Economic benefits
Non-economic benefits
Public goods
Policy solutions

3. Importance of European Agriculture
11 million farms – 22 million workers
Another 22 million in related sectors
Source of employment in rural areas
Output value >€220 billion
However – low economic viability of farms

4. Importance of direct payments

5. Importance of direct payments

6. Direct payments not just for farmers
Supports production
Multiplier effect (agriculture larger)
Upstream and down stream effects
Regional multiplier
Low level of leakage
Renwick (2013) Irish case
Return to €1 of direct support €2.7 in output and €1.7 in household spending

7. It’s not all about the money!

8. Non-Market Value of Farming
Non-market goods - public goods
Characteristics of a public good
Non-excludable
Non- rival
Subject to a free rider problem
Hence a market failure exists
State intervenes to guarantee supply

9. “Collectively ecosystem services”
Typical Public Goods
Landscape management
Biodiversity
Climate Action
Animal Welfare
Cultural and heritage protection
Food Security
“Collectively ecosystem services”

10. Supply of public goods Related to types of farming and practice
Intensity and land management
Farm type and size (pasture based)
Many factors negatively affect provision
Decreasing and volatile prices
Need for intensification
Lifestyle choice

11. Landscape Management

12. Landscape Management Maintaining original landscape character
Land abandonment
Spread of scrub and wildfires
Soil degradation
Appropriate landscape management can
Protect soil fertility
increase resilience to flooding
Carbon sink

13. Biodiversity

14. Biodiversity
Traditional farming systems protect indigenous flora and fauna
Grazing & hedgerows can protect habitats
Specific-breed and habitat links
Intensification and abandonment contribute to loss of biodiversity
Farmland bird numbers down 48% since 1980 – Bird monitoring scheme

15. 300,000 km of hedgerows in Ireland – noticenature.ie
450,000 km of hedgerows in the UK - wildlifetrust

16. Climate Action

17. Climate Action Agriculture both a source and a sink for carbon
Maintenance & promotion of carbon sinks
Forestry
Agroforesty
Soils (permanent grassland)
Market does not reward carbon efficient production
Climate smart farming – practices and technologies

18. Animal Welfare

19. Animal Welfare
Eurobarometer results suggest increasing demand for high animal welfare standards
Legislation sets minimum standard – performance above this
Declining output prices result in need to intensify to maintain incomes
Some intensive practices reduce animal welfare standards
Grass based livestock agriculture – natural form
Scientific evidence of human health benefits to grass based livestock products

20. Culture & Heritage Living countryside Countryside management
Preventing depopulation
Protecting traditional methods
Countryside management
– important aesthetic role
“At least 86% of the open access land in England is found in the uplands, attracting 40 million visitors and making £1.78 billion
for local economies every year. Rural Wales attracts 19m day
visits and 2.28m overnight stayers in a year, spending a £674m
and £367m respectively. The Scottish countryside sees 2.64m
overnight stayers and 26m day visitors in a year.”
Source: NSA (2016)

21. Food Security Access to affordable and safe food
Is it a concern in a time of global free trade?
Pests, diseases, weather and climate change in the context of growing populations
Ensure resilient food supply chains globally and locally

22. “benefits humans derive from ecosystems”
Ecosystem Services
“benefits humans derive from ecosystems”
Millennium Ecosystem Assessment (2006)
Provisioning: what is produced – food, fibre & water 
Regulating: control of climate & disease 
Supporting:  nutrient cycles & crop pollination 
Cultural: recreational benefits & human welfare. 

23. Demand for Public Goods
There is no market for public goods
Hence difficult to value
Willingness to pay studies
Large experimental studies (expensive)
Subject to criticism – although widely accepted
Stated preference V’s revealed preference
Value transfer studies

24. Valuing of Public Goods
Valuing landscape aesthetics
DG Joint Research Centre
(Ciaian and Gomez y Paloma 2011)
Reviewed 33 EU studies “valuing agricultural landscape” across 11 EU countries
Average value of €142 per hectare

25. Some relevant examples
Valuing ecosystem services in mountainous Spain (Bernues et al 2014)
Willingness to pay
>50% for prevention of fires
20% for protection of biodiversity
20% for locally produced food
Price willing to pay 3 times the current agri-env payment

26. Supply and demand for public goods
Source: Cooper et al 2009

27. Policy Intervention required

28. Future design of CAP
Greening in Pillar I & Voluntary Agri-environmental programmes in Pillar II
Weaknesses
Pillar I (low requirements)
Pillar II (optional)
Public goods need to be protected
Pillar I

29. Future design of CAP Time specific contract New policy to focus on
Measureable outcomes
“Contract service provision” – Rise Foundation (2017)
New policy to focus on
Climate change focus essential
Maintaining permanent grassland
Suite of climate smart technologies
Nutrient management plans
Manure management

30. Conclusions Direct payments support farmers & wider economy
Farming provides non-economic benefits (public goods)
Many trends threaten the delivery of public goods
Supply and demand imbalance
By definition should be supported by state
Priority for CAP reform
Central to Pillar I
Targeted and measureable outcomes

31. Thanks for your attention