Local Agriculture, Global Ecosystems, and Human Survival Summit Insights
Explore the intersection of local agriculture, global ecosystems, and human survival through the lens of environmental economics, resource thresholds, and market solutions. Delve into the importance of essential resources, ecological thresholds, and the role of local agriculture in sustainable practices and economic efficiency.
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Local Agriculture, Global Ecosystems, and Human Survival Local Food Summit. Anne Arbor, Michigan. March 31, 2014 Joshua Farley Community Development and Applied Economics Gund Institute for Ecological Economics University of Vermont Professor Visitante Especial Universidade Federal de Santa Catarina
Planetary Boundaries and Conventional Agriculture
How do we solve this problem? How serious is the problem? Essential and non-substitutable resources Ecological thresholds Economic/physiological thresholds Can markets solve it? Economic efficiency and just distribution Ecosystem services Technological advance What is the role of local agriculture?
Essential and Non-substitutable Resources Food, water, energy, ecosystem services Essential to human survival with no adequate substitutes Schelling, 2007 Critical thresholds Ecological Physiological Inelastic demand Large changes in marginal value with small changes in quantity E.g. grain prices in 2007
Ecological Thresholds and the Supply Curve Must sum together all costs: labor, capital, biodiversity loss, nitrogen, climate change, etc. (marginal cost) Economic output (fossil fuel economy)
Physiological Boundaries/Thresholds and the Demand curve Value: Increasing rapidly with decreasing quantity. food security, household security Value: shift from marginal to total value (e.g. diamond-water paradox) physiological threshold: e.g. starvation Value: low and stable Trade-offs: relatively unimportant benefits Opportunity cost Trade-offs: Resilience, increasingly important benefits Trade-offs: Life sustaining benefits Economic output (fossil fuel economy)
Market Solutions? Negative externalities Must be internalized for efficient allocation Monetary valuation (implies substitutability) How do we account for changing values? Army of technocrats providing data to politicians? $ $
Market demand in an unequal world Competition and self interest Americans spend 6.7% of income on food for home consumption 11.6% of food dollar goes to farmers <1% of income spend on raw food How did you react when wheat prices tripled? Elasticity of demand 1% in retail prices ~.08% in consumption 1% raw food prices, .001% consumption
Market demand in an unequal world Many poor countries spend >70% of income on food for home consumption Perhaps 50% spent on raw food? How do poorer countries react when wheat prices triple? Arab spring Elasticity of demand ~.7 Budget share and elasticity Market demand = preferences weighted by purchasing power
Market Demand, Unequal World Trade-offs: Starvation now or in future Physio thresh w/ equal distribution Eco thresh nitrogen Eco thresh carbon 1245 1800 2700 Sustainability and justice vs. preferences
Market Supply and Demand Marginal market costs (Market supply curve)) Physiological boundaries for rich Price Poor people have no demand food output
Market Allocation of Essential Resources on an Unequal Planet Does it maximize utility? The perversion of utility Is it efficient? Does it maximize monetary value? Would it be possible to re-allocate food from obese people to malnourished people without making anyone worse off? Do we need to make subjective value judgments to answer this? Objective needs should take priority over subjective preferences weighted by purchasing power
Market Equilibrium on a Full and Unequal Planet? Equilibrium result of negative feedback loops Scarcity price increase decrease in demand; increase in supply equilibrium No prices for non-market goods (most threats to planetary boundaries Essential resources Price increase decrease in demand Finite resources on full planet (food, energy, land, stocks) Price increase increase in supply (or only at cost of future supply) Speculation Price increase increase in demand Dis-equilbrium, redistribution from positive feedback loops
Solutions Redefining agricultural efficiency to identify leverage points Assessing the role of local agriculture in pushing those levers
Redefining Goals: Efficiency What is efficiency? Ratio of benefits/costs Agriculture Food production/land; food/labor Most efficient system ever? Energy in, energy out? Economics diminishing MB, rising MC. MC=MB Maximizing monetary value How do we do this for food?
Ecological Economic Efficiency What is the desirable end? Normative judgement What are the costs? economic technical efficiency ecological efficiency efficiency
Allocative efficiency Producing the right foods with the right resources on the right land Distributive efficiency Ensuring these foods go to those with the greatest physiological need More equitable distribution of wealth? Alternatives to price rationing? Local agriculture? Community gardens, CSAs, Farmers markets (elitist or popular) Food Security
Throughput broadly defined Water, energy, fertilizers, labor, capital, land Cannot rely on non-renewables Requires major investments in R&D, extension Economics of information Minimize costs, maximize benefits Land grant universities Markets fail to account for future generations, the poor, the environment Local agriculture Sharing knowledge Guiding research agenda
Minimizing impact of throughput on ES Minimizing agrotoxins, fossil fuels, erosion Accounting for non-market benefits Open access and public goods Cooperation required Local agriculture Internalizing externalities Restoring ecosystem services
Summary & Conclusions Must define appropriate goals for agricultural systems on crowded, finite planet Must tailor economic institutions to goals and resource characteristics Local agriculture is likely to be more efficient economically, technically and ecologically
