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Group 4 - The Environmental Impacts of Agriculture in British Columbia

Article:[1]

Time to Slow Berry Field Growth (September 9, 2009)

Summary:

An environmental association is criticizing the expansion of the cranberry industry in the Pitt Meadows area. Bruce Hobbs, a member of the group, states that this expansion could cause irreversible damage to the local wetlands and wildlife. He notes that cranberry growing uses almost four times the water that blueberry growing does. The use of pesticides and the heavy land use are also criticized for destroying the vegetation and biodiversity of the wetland habitat. He cites a Wisconsin Department of Natural Resources article that emphasizes the negative impacts of cranberry farms on local ecosystems.

However, Mike Wallis, the executive-director of the B.C. Cranberry Growers Association, argues that all farming leads to monoculture and that cranberry growers are not in business to protect biodiversity. Although he admits that cranberry farming uses more water than blueberry farming, he contends that the expansion of cranberry farming in the area is sustainable and only a ten percent increase in acreage over five years. Asserting that cranberry growers use special drainage pipes to prevent runoff and also practice field flooding to minimize their pesticide use, Wallis believes that cranberry farming has a very limited impact on the natural environment.

Hobbs stresses that field flooding kills beneficial insects in addition to harmful insects and criticizes the excessive use of water. He also condemns the fact that Diazinon, a powerful pesticide, is commonly used by cranberry growers to control insects. Though the Pesticide Action Network indicates that Diazinon has many negative environmental effects and a Ministry of Environment report emphasizes that it should not be used near streams or rivers, Hobbs claims that cranberry farms often use the compound and are usually much closer to rivers than blueberry farms are. In 2012, Diazonin will be discontinued and no longer available for use for pest control due to environmental and health concerns. A 2006 environmental study found a high concentration of Diazinon in the Katzie Slough in Pitt Meadows. Hobbs ultimately questions whether there is a net benefit to cranberry growing in the region.

Analysis:

Social Benefits:

Though the article does not explicitly site any social benefits, cranberry growing can have positive impacts on the economy and society in general. Cranberries themselves have a large nutritional value, there have been many studies done by nutritionists that suggest this. Cranberry juice has been known to have anti-bacterial properties that can help people who have asthma attack, urinary tract infection. Cranberries contain anti-oxidants and cranberry extract reduces the oxidation of "bad cholesterol" and can help prevent ulcers. A variety of different products can be made from cranberries. These include cranberry juice, cranberry concentrate capsules, and cranberry jams. The factories that process and produce these value-added goods earn their profit by directly using cranberries from cranberry growers. Cranberry farms often provide many job opportunities to local farm workers and fruit pickers. Also, people in the surrounding area may value the cranberry farms because they are a local farm and want to protect them. A contingent value questionnaire or an examination of the extra price paid in the surrogate market for local produce could extract the consumers' willingness to pay (WTP) for local cranberries. These WTP values could be used as an estimate of the social benefits that cranberry farms create.

Social Costs:

The growth in cranberry acreage in Pitt Meadows raises concern for both environmental quality and the health of the areas wetlands.

“The Natural Place!” That is what Pitt Meadows claims to be, as the town believes its green spaces attract many of the people living there[2]. The expansion of the cranberry farming in the area threatens the sustainability of these green spaces over time both through the large water demand of the farm along with the effects of Diazinon on animals, especially birds.

Much of the green space in Pitt Meadows also has a role in flood protection. The flood plains of the Fraser River, which have the potential to flood every year, extend into the wetlands of Pitt Meadows. Without wetlands which are important in absorbing excess water in flood, areas downstream including Richmond and Delta become more vulnerable during years of high floods[3].

The cost of the environmental impact expanding cranberry acreage are measurable through analyzing costs associated to the issue at hand. This includes using the difference in the cost of living and cost of real estate in Pitt Meadows relative to other areas, and the amount spent on visiting as well as maintaining green space to place a value on the environment in Pitt Meadows. Along with the value of environmental quality and or green space, the value of the wetlands themselves must be estimated. This could be done by evaluating how much money is spent on flood management and how that has changed as wetlands along the Fraser have been developed.

As identified below in Figure 1, one of the significant social costs of cranberries is the environmental impact of using the pesticide Diazinon. The total damage to the environment is represented by the area under the marginal damage (MD) curve.

The opportunity costs associated with wetland destruction and ecosystem alteration with the application of the pesticide Diazinon and the changed hydrology resulting from cranberry monocultures are externalities that are not considered in the costing of cranberry production today. Wetlands serve a significant ecological function by maintaining water quality and serving as a habitat for many species dependent on wetland features. They can also provide an aesthetic benefit to local residents and visitors. Ecotourism is a growing sector within the Tourism marketplace that may be negatively impacted by the destruction of wetland habitat. Wetlands and wetland tours provide for a potential social benefit. Destroyed wetlands may present reduced tourism revenue opportunities and lost alternative economic benefits to the local economy. Furthermore, aesthetic impacts, such as the costs due to wetland degradation, can often reduce the value of landscape features that are attractive to many and usually increase local land prices and benefit residents who may live near the wetlands. Hedonic estimation and contingent valuation surveys could be used to estimate the willingness to pay (WTP) of consumers to protect the wetland ecosystems, which would provide insight into the social costs of cranberry farms.

The human health impacts of Diazinon pose a potential significant social cost and a further externality that is not considered in the costing of cranberry production.

Government Policy:

As identified by article author Melnychuk of the Maple Ridge News, cranberry farming in the Pitt Meadows area has some pollution problems, specifically the use of the pesticide Diazinon. According to Mr. Menychuk's sources the pesticide has a number of significant negative health impacts observed in animals including paralysis at low concentrations and death at higher levels of exposure. Cranberry farming in BC is one sector of the agricultural industry that the government may want to develop specific policy to reduce the external costs associated with aquatic ecosystem damage resultant from the use of chemicals like Diazinon.

Before the government takes action, additional scientific and economic (MC, MS, MD, MAC) information on the impacts of cranberry farming due to Diazinon pollution would help inform policy decisions. A cost-benefit and environmental impact analysis are two examples of tools that could support the development of socially efficient policy (In Figure 1 this is demonstrated by moving up the MAC curve towards E*). In this case the environmental good in question, wetlands and natural areas, does not have a market price - valuing the loss of the non-market good due to exposure of Diazinon will require direct (health damage resultant from exposure - a dose-response relationship) or indirect valuation methods (i.e hedonic estimation or contingent valuation).

In developing a policy, the government may want to consider opportunity costs, the loss of wetlands due to polluting cranberry farming, reducing quality of life to nearby residents, reducing property prices, negative impacts on ecological functioning (wetlands act as a natural kidney - filtering out sediment and pollutants from water courses) among others.

A number of policy tools are available to the government to support internalizing externalities (environmental damage of Diazinon), and thereby reaching a cost-effective equilibrium, where marginal damages are equal to marginal costs. In order to develop a range of policy options resulting in efficient solutions (balancing abatement costs and damages), the following are possible options for consideration:

Figure 1: Policy tools to support Diazinon reduction by BC Cranberry farmers.

Uniform Standard If the government had a good handle on both the Marginal Damage (MD) curve and the Marginal Abatement Costs (MAC) associated with cranberry farming pollution (Diazinon), a uniform standard may be an appropriate policy choice. Under this scenario, the government may identify an ambient concentration (e1) of Diazinon and require all farmers to implement abatement techniques to reduce the amount of Diazinon released into the water systems. The applicaiton of uniform standards poses significant enforcement challenges to the government, compounded by the non-point source nature of pollutant run-off from cranberry farming.

Taxes and Subsidies The government may impose a tax as an incentive for farmers to reduce Diazinon pollution. As with an Uniform Standard policy, the non-source aspects of farm run-off pollution may make it difficult to measure an individual farmers contribution to ambiant pollution levels. Instead of issuing a tax, a policy that is typically viewed poorly by the public with potentially negative implications for elected officials, the government may choose to provide a subsidy to farmers to reduce their Diazinon application on their fields. The government could also apply an environmental tax on the Diazinon chemical at point of sale, increasing the cost of the chemical and possibly reducing its use on cranberry fields.

Transferable Discharge Permits If the government knows the aggregate MAC and MD, the government could develop a marketplace whereby transferable discharge permits for Diazinon would be issued according to a formula based on target ambient levels of emissions. The government would have to develop trading rules and issue a limited amount of pollution rights. Depending on a farmer's proximity to sensitive ecosystems, an ambient-based TDP system may need to be applied to avoid hot spots or areas of compounded damages.

Figure 1 provides a graphical representation of the different policy tools that would ideally motivate farmers to implement abatement technologies (reduced use of Diazinon through alternative products for example) to reduce the marginal damage on the environment - so that the cost of producing a pound of cranberries includes current externalities - environmental degradation.

In addition to government efforts to reduce cranberry farming pollution, farmers may be persuaded by a moral argument to farm responsibly, not to use Diazinon and reduce the associated negative impacts on the surrounding environment. Cranberry farmers may choose to institute a "green program" standard - selling their product with a non-Diazinon use label looking to develop a market advantage wih an informed consumer. A farmer may also be persuaded to not use Diazinon to avoid litigation resultant from person(s) looking for compensation because of lost value of property, health impacts or aesthetic considerations resultant from a loss of wildlife.

Prof's Comments

For this issue, the marginal WTP and marginal cost curves are better analytical tools. The comment 'we are not in the biodiversity business' highlights the difference between the marginal private cost and marginal social cost of cranberry production. Loss of biodiversity, wetlands, killing of birds, etc. are negative externalities to cranberry production, suggesting that the marginal social cost is significantly above the marginal private cost. Whether the demand for cranberries captures all of the relevant benefits is another question. My guess is that it is pretty close. Appropriate policy tools here may include providing subsidies for land owners who own wetlands that are suitable for conversion to cranberry bogs to keep them as natural wetlands. Outright purchase of such lands and holding them for the public is another option.