1. Agricultural Land Use and Ecosystem Services in the Canadian Prairies Benjamin S. Rashford Agricultural and Applied Economics University of Wyoming

2. What are Ecosystem Services? Many things to many people… “…the condition and processes through which natural ecosystems, and the species that make them up, sustain and fulfill human life (Daly, 1994)”

3. Ecosystem Services and Agriculture Agriculture and ecosystem services are largely interrelated. Agro-ecosystems  generate beneficial ecosystem services  receive services from non-ag systems  services from non-ag systems are impacted by agricultural practices

4. Ecosystem Services and Agriculture Services consumed Services produced climate regulation…soil provision…pollination… genetic diversity…pest regulation… food & fiber…scenery… recreation…biodiversity… carbon sequestration…

5. Importance of Agricultural Lands for Ecosystem Service Provision Agro-ecosystems are critical to the future provision of ecosystem services because: 1.Abundant (30-50% of earths land cover) 2.Knowledge of biophysical processes 3.Experience managing ecosystem services 4.Experience with incentive programs

6. Agricultural Land Use Change and Ecosystem Services Changes in management practices Changes in agricultural uses Conversion to non–ag. uses

7. Agricultural Land Use in the Canadian Prairies Historical Trends Total Farm Area + 1.3% + 1.4% - 0.3%

8. Agricultural Land Use in the Canadian Prairies Historical Trends - 31% + 3% + 342% + 22% + 195% + 483% Acres by Ag. Use – Saskatchewan

9. Agricultural Land Use in the Canadian Prairies Land Use Modeling - Overview Theory – landowners’ choose the use that maximizes net returns to land Share of land in each use Output pricesInput costsLand qualityGov’t policyRegional factors

10. Agricultural Land Use in the Canadian Prairies Land Use Modeling - Data Output pricesInput costsLand qualityGov’t policyRegional factors Share of land by Census Agricultural Region (CAR) in: 1. Spring wheat 2. Oats & barley 3. Canola & flaxseed 4. Winter wheat & fall rye 5. Hay 6. Pasture Manitoba, Alberta, Saskatchewan Share of land in each use (1981-2006)

11. Share of land in each use Agricultural Land Use in the Canadian Prairies Land Use Modeling - Data Input costsLand qualityGov’t policyRegional factors Output price by use (real $CN / metric tonne) Expected price = two-year moving average Expected yield = five-year Olympic average Output prices

12. Share of land in each use Agricultural Land Use in the Canadian Prairies Land Use Modeling - Data Land qualityGov’t policyRegional factors “Terms of trade” = Input costs Input price index __________________ Output price index

13. Input costsOutput prices Share of land in each use Agricultural Land Use in the Canadian Prairies Land Use Modeling - Data Gov’t policyRegional factors Proportion of land in each CAR in: - Soil Capability Class 1 & 2 - Soil Capability Class 3 & 4 - Soil Capability Class 5 & 6 Land quality

14. Input costsOutput prices Share of land in each use Agricultural Land Use in the Canadian Prairies Land Use Modeling - Data Gov’t policy Harvest Probability - probability that spring crop is harvested in time to plant fall crop Shipping Distance - minimum distance to nearest major processing/exporting center Population Density - population density in each CAR Regional factors

15. Land qualityInput costsOutput prices Share of land in each use Agricultural Land Use in the Canadian Prairies Land Use Modeling - Data Could not be used due to five year increments in Census data Gov’t policy

16. Share of land in each use Agricultural Land Use in the Canadian Prairies Land Use Modeling - Data Expected prices Expected yields Input prices Soil Quality Harvest probability Shipping distance Population density = function of

17. Agricultural Land Use in the Canadian Prairies Land Use Modeling – Model Results Model performance: Predicts well – predicted shares are close to the observed shares Land Use Share Regions (CARs) Actual Predicted

18. Agricultural Land Use in the Canadian Prairies Land Use Modeling – Model Results Determinants of Land Use Expected prices Expected yields Input prices Soil Quality Harvest probability Shipping distance Population density Price Yield of use i Share of use i Price Yield of use j Share of use i

19. Agricultural Land Use in the Canadian Prairies Land Use Modeling – Model Results Determinants of Land Use Expected prices Expected yields Input prices Soil Quality Harvest probability Shipping distance Population density Crops are mores sensitive to price changes than hay and pasture 1% increase in livestock price 0.04% increase in pasture share of land 1% increase in winter wheat price 2.2% increase in winter wheat share of land

20. Agricultural Land Use in the Canadian Prairies Land Use Modeling – Model Results Determinants of Land Use Expected prices Expected yields Input prices Soil Quality Harvest probability Shipping distance Population density Input Price of use i Share of use i

21. Agricultural Land Use in the Canadian Prairies Land Use Modeling – Model Results Determinants of Land Use Expected prices Expected yields Input prices Soil Quality Harvest probability Shipping distance Population density High proportions of soil class a 1 & 2 High shares of grains and oilseeds

22. Agricultural Land Use in the Canadian Prairies Land Use Modeling – Model Results Determinants of Land Use Expected prices Expected yields Input prices Soil Quality Harvest probability Shipping distance Population density High harvest probability High shares of fall grains

23. Agricultural Land Use in the Canadian Prairies Land Use Modeling – Model Results Determinants of Land Use Expected prices Expected yields Input prices Soil Quality Harvest probability Shipping distance Population density Long shipping distance Lower shares in all uses High population density Lower shares in all uses

24. Agricultural Land Use in the Canadian Prairies Land Use Modeling – Model Results Predicting Future Land Use – Ecosystem Services (?) 7.03,473,284 52,875,760 49,402,476Total 1.684,313 5,236,414 5,152,101Hay -1.7-304,599 17,333,814 17,638,413Pasture -13.1-28,035 186,140 214,175Fall Rye -48.2-114,023 122,739 236,762Winter Wheat -70.9-1,095,505 449,374 1,544,879Flaxseed -15.7-940,225 5,037,047 5,977,272Canola -19.0-1,111,579 4,727,722 5,839,301Oats & Barley 54.66,982,937 19,782,510 12,799,573Spring Wheat Percent Change Absolute Change Predicted 2011 Acreage Baseline 2006 AcreageLand Use Predicted Land Use Change - Saskatchewan

25. Agricultural Land Use in the Canadian Prairies Land Use Modeling – Model Results Pasture Hay Canola Oats & Barley Spring Wheat Fall Rye Flaxseed Winter wheat Decrease in wildlife habitat & carbon sequestration; Increases in erosion & pesticide run-off Decrease in waterfowl nesting habitat

26. Agricultural Land Use in the Canadian Prairies Land Use Modeling – Model Results Predicting Future Land Use – Spatial Targeting Target areas with high conversion rates and large waterfowl populations

27. Agricultural Land Use in the Canadian Prairies Land Use Modeling – Model Results Predicting the Effects of Payment Programs Predicted changes in winter wheat with a $10/acre incentive payment

28. Agricultural Land Use in the Canadian Prairies Summary and Conclusions Agricultural land is critical to the future provision of ecosystem services - farmers and ranchers will continue to be the primary stewards and producers of these services; Understanding the determinants of agricultural land use decisions will allow us to better target and protect ecosystem services and; Will allow to efficiently compensate farmers and ranchers for their management of the ecosystem services society demands