University of East Anglia research reveals true cost of farming to UK economy

July 04, 2013

The British landscape is not being used to its best advantage according to a new report from environmental economists from the University of East Anglia (UEA).

Research published today in the journal Science shows that allowing land use to be determined purely by an agricultural market, which is distorted by multi-billion pound subsidies, will result in considerable financial and environmental costs to the public.

It shows that a shake-up in the way EU subsidies are given out could greatly improve the way UK farm land is managed.

While the research has looked specifically at the UK, the same methods could be applied to any area of the world with similar results for many countries.

Land use in the UK is dominated by agriculture which accounts for almost three quarters of the total surface area. Payments to farmers in subsidies exceed £3billion per year, or nearly half the total annual value of UK agriculture.

The research team looked at half a million land use records and found that at present, UK land use represents poor value for society relative to that subsidy level. But a refocusing of payments could substantially improve the situation.

Alongside tangible financial costs in the form of subsidies, the researchers assessed the economic value of other costs, such as poor opportunities for recreation and high emissions of greenhouse gases associated with present land use. They also took into account the impact of declining wild species and biodiversity caused by intensive farming.

Looking to the future, they weighed up the consequences of alternative land uses and assessed a range of alternative scenarios going forward to the year 2060.

Key findings:"We we worked out an economic value for each of these 'non-market' items to help us create a much more detailed economic picture of land use in the UK.

"We looked ahead to 2060 and took into account other factors that may impact farming such as changing policies, environmental regulations, market forces, changes in farming technology and climate change, which could altering the growing season and amounts of rainfall.

"We found that a conventional market dominated approach to decision making will reduce the overall values from the landscape in many parts of the country. However, taking into account these non-market environmental benefits or costs of land use would lead to net financial gains nationally, due to reduced pollution, enhanced recreation and urban greenspace, and improvements in biodiversity habitats.

"It is absolutely vital that impacts which are difficult to put a price on, such as a loss of biodiversity, should be incorporated into land use policy. But no single policy will be optimal everywhere. Our findings show that a targeted approach to decision making is the best approach.

"The clearest way to achieve this goal is to reform the EU's Common Agricultural Policy (CAP) which oversees payments to farmers in excess of £3 billion per year. The vast majority of these payments are made without consideration for environmental performance. Rewarding farmers for delivery of a broad spectrum of ecosystem services would provide policy makers with a very powerful tool to secure beneficial land use change."
-end-
The research was funded by the UK National Ecosystem Assessment (NEA) and its Follow-On program (which are together supported by the UK Department for Environment, Food and Rural Affairs (Defra), the devolved administrations of Scotland, Wales and Northern Ireland, the Natural Environment Research Council (NERC) and the Economic and Social Research Council (ESRC)); and the Social and Environmental Economic Research (SEER) project.

'Bringing ecosystem services into economic decision making: Land use in the UK' by Bateman, Ian J., Harwood, A., Mace, G.M., Watson, R., Abson, D.J., Andrews, B., Binner, A., Crowe, A., Day, B.H., Dugdale, S., Fezzi, C., Foden, J., Haines-Young, R., Hulme, M., Kontoleon, A., Lovett, A.A., Munday, P., Pascual, U., Paterson, J., Perino, G., Sen, A., Siriwardena, G., van Soest D., and Termansen, M is published in the journal Science on July 5, 2013.

University of East Anglia

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