Making Policy to Achieve Sustainable Agriculture

1. Making Policy to Achieve Sustainable Agriculture American Farmland Trust Ann Sorensen AAAS: Feb. 18, 2007

2. Making Policy to Achieve Sustainable Agriculture Environmental Sustainability: • Overview: How sustainable are we? • Options: • Regulate (compliance; new regulations) • Increase Incentives (conservation programs) • Create a paradigm shift (ecosystem services)

3. American Farmland Trust • Founded in 1980 to save farm and ranch land • Brings together farmers, communities, conservationists, developers and government officials to work out solutions for the common good

4. American Farmland Trust Saving the land that sustains us • Protecting the best land • Planning for growth with agriculture in mind • Keeping the land healthy

5. Current Sustainability (from ERS 1999) • Productivity rose (from 1948-1980, 1.4%/yr; from 1980-1994, 3.3%/yr) (1.1 percent for nonfarm sector) • Soil erosion declined from 3 billion to 2 billion tons/yr, no threat to productivity but high off-farm impacts ($2-8 billion/yr) • Groundwater depletion rates fell • Surface water quality improved but ag is a leading source of impairment • Ag now a net supplier of wetlands

6. Current Sustainability(from ERS 1999) USDA ERS concludes: • Environmental problems exist and the resource base is depreciating but the extent of the effects is in the range that can be adequately addressed by thoughtful policy

7. Sustainability Challenge in the Future: Climate Change (SWCS 2003) Climate change (more severe rainfall events) may lead to: • Increases in soil erosion ranging from 4 percent to 95 percent • Increases in runoff from 6 percent to 100 percent in some locations

8. Sustainability Challenge in the Future: Structural Changes • In 2002, 143,000 farms produced 75 percent of the value of all ag. output. Two million farms produced the remaining 25 percent • In 2019, farming depends more on rural communities than rural communities depend on farming • Global trade will be a key to future profitability but the United States may not be in the driver’s seat

9. Sustainability Challenge in the Future: Structural Changes • In 2019, farmers produce what they can sell, not simply sell what they produce • Environmental issues shift to market-driven actions that achieve environmental benefits. • Research and technology are increasingly global in nature • The government’s role changes due to budget pressures and trade agreements

10. Agriculture is a Major Land Use

11. Ag and Water Pollution

12. Sustainability IndicatorsHeinz Center

13. Sustainability IndicatorsHeinz Center

14. Sustainability IndicatorsHeinz Center

15. Sustainability IndicatorsHeinz Center

16. Sustainability IndicatorsHeinz Center

17. Sustainability IndicatorsHeinz Center

18. Current Sustainability:Conservation practices by Size

19. Current Sustainability:Conservation Practices by Type

20. Current Sustainability:Conservation Practices by Size

21. Current Sustainability:Use of GM Crops

22. Adoption of Sustainable PracticesERS 1999 • Profitability drives most adoption • Structural barriers impede adoption (lack of financial capital; labor availability) • Site specificity means no one technology will be sustainable in all regions • Economic risk may hinder adoption

23. Changing Behavior (from J. Salzman, 2005) Prescription: command and control regulation and Penalties: taxes and fees Payment: subsidy (direct payment or tax break) and Persuasion: information approach (goal of self-regulation) Property rights: privatization and allocation of the right to a resource

24. Prescription and Penalties:Conservation Compliance • To be eligible for Federal ag programs, producers must reduce soil erosion, protect wetlands, protect erosion-prone lands • Unique policy tool – regulate, penalize (withhold benefits), but violation does not imply illegal activity • Compliance rates still high (96 percent)

25. Commodity program payments overlap with HEL cropland

26. Prescription and Penalties:Expand Compliance • Address nutrient run-off and leaching • Uses overlap between programs and problems to address problems • Payments generally exceed costs of addressing nutrient losses but might not be as effective in areas with excess manure • USDA: prefers “sod saver” provision

27. Prescription and Penalties:Regulate Environmental Impacts(J. B. Ruhl) • Use conventional prescriptive regulation for large operations (CAFOs) • Establish a national pesticide and fertilizer use reporting system • Tax pesticide and fertilizer use • Retire ecologically important land • Require participation in watershed-based pollutant trading

28. Payment and Persuasion:Public’s Willingness to Pay

29. Willingness to Adopt BMPs(from AFT survey 2001)

30. Willingness to Adopt BMPs(from AFT survey 2001)

31. Payment and Persuasion: Continue Funding Increases

32. Payment and Persuasion: 2007 FB Recommendations • Increase and mandate funding • Consolidate and simplify programs, expand environmental benefits • Enact New Initiatives • AFT’s Cooperative Conservation Initiative and Conservation Loan Guarantee • Refine existing programs

33. Payment and Persuasion: Expand Adoption of BMPs • Profitability: Greater access to funds; markets for environmental services; eco-labels • Structural barriers: Educate lenders; address labor shortages • Site Specificity: Decentralize approach to research, development and tech transfer • Economic risk: Use targeted BMP insurance

34. Harness Property Rights: Ecosystem Services Retiring cropland reduces soil erosion, decreases nutrient, pesticide and sediment loadings. Provides permanent grass/tree cover. Decreased loadings improve water quality and plantings provide wildlife habitat. Services = Cleaner water, more wildlife

35. Harness Property Rights:Ecosystem Services Vision • Farms provide ecosystem services along with food and fiber: • Enjoy broad public support • Considered “green box” under WTO • Allows farmers to “sell” environmental services much like they sell agricultural products • Provides a steady, reliable stream of revenue

36. Harness Property Rights:Environmental Services • Reduce pollutant runoff (N & P) – 40 water quality trading programs in United States, 22 allow trades with ag • Reduce greenhouse gas emissions • Restore wetland functions (100 million acres of wetland, 45 percent of initial base) were converted between 1780 and 1990 • Provide wildlife habitat

37. Harness Property RightsSequestering Carbon

38. Harness Property Rights:Obstacles to Trading Credits • Low demand - role of supporting regulation • Difficulty in measuring may lead to high transaction costs (scientific uncertainty) • Farmers may be reluctant to participate in program that is partly regulatory, even with compensation – afraid information shared could lead to regulations

39. Harness Property Rights:Ecosystem Services • Mentioned in AFBF MAAPP report as a “exciting” opportunity • USDA 2007 Farm Bill recommendations include $50 million in mandatory funding to develop uniform standards for quantifying environmental services, establish credit registries, and offer credit audit and certification services

40. Harness Property Rights:Multiple Markets • Conservation planning has matured • Millennium Ecosystem Assessment has categorized ecosystem services • Economic valuation is helping set prices • Tools for decision-making emerging • Small scale efforts underway

42. Summary • U.S. agriculture is becoming more sustainable • We have a lot of policy tools to increase sustainability but they depend on political will • Current focus on climate change and search for energy alternatives puts a spotlight on agriculture and provides us with an opportunity to shift to ecosystem services