Econ 371 Wiki Main Page

Group 4 - The Environmental Impacts of Agriculture in British Columbia

Article:[1]

Food for Thought (February 9, 2009)

Summary:

Holland and de la Salle make a compelling argument for the benefits of local agriculture - and in particular the advantages of farming in urban centers which they refer to as agricultural urbanism. In BC, land-use has trended towards converting arable land to urbanized concrete jungles. The authors argue that the historic dichotomy between concrete and arable land does not need to continue; the opportunity to bring farming into the city is an opportunity that we should embrace and take advantage of the many associated benefits. This article argues that local agriculture has a number of economic benefits. Locally grown food that is organic is value added - whereby informed consumers demonstrate an increased willingness to pay for the same unit of produce. In addition to increasing local economic opportunities (positive externalities), growing and selling local foods reduces a number of social costs (negative externalities) associated with obesity (eating refined foods) and other health costs associated with imported pollution (i.e. melamine) found in imported foods grown in polluted soils and waters.

In addition to social health benefits, agricultural urbanism also directly benefits the local economy by increasing revenue streams from agro-tourism and provides environmental conservation and associated value.

The authors propose a six point strategy to support and realize the benefits associated with growing and promoting value-added locally produced foods. The six point strategy includes: 1. BC government to switch its emphasis from agriculture to food 2. Shift to organic farming practices 3. Inclusion of food production in new development 4. Train the next generation of innovative local farmers 5. Increase support (demand) for local foods 6. Local government must take a positive role in promoting agricultural urbanism.

In the face of Hubbert's peak oil theory, increasing fuel prices and climate change impacts, embracing agricultural urbanism may be one of the most important policy choices that local and senior governments and we, as individuals, make. Our economy and quality of life may depend on it.

Analysis:

Social Benefits:

Figure 1: The effects of agricultural urbanism.

A healthy, local, and sustainable food system can bring many benefits to society, as highlighted in the article. Producing food that is healthy can generate various positive spin-offs for the economy such as increasing labour productivity and reducing health care costs. This is in contrast to globalized and mass produced food products that are often more susceptible to contamination and are usually not fresh. By growing food locally, transportation costs decrease, environmental impacts may be slightly reduced, and several local fruit pickers and farm workers can be employed. By locally producing value-added food products from home-grown raw foods, consumers can also avoid importing these developed products at higher prices and local producers can profit. Residents may also place high values on local food systems as evidenced in different real estate prices, different prices paid for local and non-local produce, and explicit statements regarding WTP. Tourists also pay money to visit the beautiful scenery and eat fresh local cuisine. Hedonic estimation can reveal a person’s WTP for the aesthetic qualities of farmland and its related scenery by comparing the prices of similar real estate and accommodation near farmland and far from farmland. By examining the surrogate market of fresh local foods, the WTP for locally produced goods can be estimated using the difference in price between local and non-local produce. Finally, the WTP for local farming can be obtained when people reveal their WTP for locally produced food by declaring it in contingent valuation surveys. The provincial government has recently been supporting local and sustainable food systems due to these benefits and the positive externalities that they create.

As shown in figure 1, MD, or WTP, increases (D1 -> D2) as a result of the positive externality that local food systems provide due the unintended benefits to residents, consumers, and tourists such as aesthetic values. MS decreases (S1 -> S2), resultant from a reduction in the supply of available land due to the ALR policy for local farms in British Columbia.

Social Costs:

Theoretically, there should be a large net benefit from local food systems, but this might not always be the case. There are also some significant social costs that can be attributed to expanding urban food and agricultural production. A significant environmental impact to urban agriculture is water pollution. If the urban farms use pesticides, the pesticide runoff may pollute the ground water that people consume. Also, agricultural practices can contribute to soil erosion. Shifting to urban agriculture can also have the effect of heavily increasing house prices and taking up valuable land in urban communities. The ALR policy in British Columbia restricts the amount of land available for development and caps the price of agricultural land, which raises the prices of all other real estate in the area. Also, large industrial or non-local farms may have lower labour and production costs compared to local farms that may outweigh the savings due to reduced transportaion costs. These large industrial farms may also provide a more stable source of food if regions are affected by droughts, flooding, etc. By moving to local urban farms, food and real estate prices could increase and there could still be some significant environmental concerns from the agricultural practices.

Government Policy:

Six steps have been outlined by Holland and de la Salle to guide society towards the benefits of agriculture within urban areas. Each of these steps, as previously mentioned, involve a measure of government intervention.

The first point recommends a general overhaul of the aim government policy takes such that it can address the issue more effectively. Currently, the government is focused on the supply side of the market, agriculture. The report suspects that focusing on regulating food - and getting closer to controlling the products being demanded - will be prove more effective.

Holland and de la Salle emphasize in their second point that it cultivating the organic and local food business is vital. Governments interaction with agri-business should therefore provide more tools and greater incentives for farmers to produce and sell food locally and produce it organically. This could include government research into organic farming and greater intervention on the regional and local level to support markets providing local food.

A third point addresses the modes of development in urban areas. In the future, as the report explains, must include space for local food to be grown, sold, and consumed. Such spaces could create a culture around local or organic foods and can be located in places such as rooftops, community hubs, or existing green spaces. Government policy that could help prompt the addition of such places into the future plans would likely include tax breaks or subsidies for qualifying projects.

Government also has relevant involvement in academic institutions. Policy which allocated greater funding for research in relevant fields of study is a necessity. Greater efficiency of agriculture is important, especially if integration with urban areas is the goal. Innovation will be key in order to provide reasonable levels of production.

Consumer demand for local and organic foods is fundamental point. Without fostering demand for the products, supply will flag. Two courses through which the government may affect consumer demand require the value added is realized. This could be done by subsidizing local and organic foods to bring costs closer to benefits. Conversely, and less expensively, educating society on the benefits of such foods could help consumers realize the location of total benefits as more than the price associated with the product.

The final point involves explicit promotion of local and organic foods. This could include direct to consumer advertising, promotion through health boards, and coordination with grocers in an area.

Prof's Comments

You have to be careful when considering articles like this. There are a lot of assumptions that should be challenged. These assumptions together lead to the conclusion that local food is better for the environment and economy than the global food system we have now. However, the global food system developed because it could out-compete the small scale local farmer. I think that buy-local is trendy - suggested in the article when speaking about who is buying it - more than anything else. If consumers want to buy locally produced food, great. However, that does not mean we are appropriately dealing with externalities. They may actually be larger.