An assessment of the total external costs of UK agriculture

doi:10.1016/S0308-521X(00)00031-7

Agricultural Systems

Volume 65, Issue 2, August 2000, Pages 113-136

https://doi.org/10.1016/S0308-521X(00)00031-7 Get rights and content

Abstract

This trans-disciplinary study assesses total external environmental and health costs of modern agriculture in the UK. A wide range of datasets have been analysed to assess cost distribution across sectors. We calculate the annual total external costs of UK agriculture in 1996 to be £2343 m (range for 1990–1996: £1149–3907 m), equivalent to £208/ha of arable and permanent pasture. Significant costs arise from contamination of drinking water with pesticides (£120 m/year), nitrate (£16 m), Cryptosporidium (£23 m) and phosphate and soil (£55 m), from damage to wildlife, habitats, hedgerows and drystone walls (£125 m), from emissions of gases (£1113 m), from soil erosion and organic carbon losses (£106 m), from food poisoning (£169 m), and from bovine spongiform encephalopathy (BSE) (£607 m). This study has only estimated those externalities that give rise to financial costs, and so is likely to underestimate the total negative impacts of modern agriculture. These data help to identify policy priorities, particularly over the most efficient way to internalise these external costs into prices. This would imply a redirection of public subsidies towards encouraging those positive externalities under-provided in the market place, combined with a mix of advisory and institutional mechanisms, regulatory and legal measures, and economic instruments to correct negative externalities. Further work examining the marginal costs and benefits of UK agriculture would help to inform future policy development.

Section snippets

Definition and concept of externalities

Farmers in the UK have been highly successful at increasing food production in the 20th century. Compared with 1950, per hectare yields of wheat, barley, potatoes and sugar beet have tripled, while milk yields per cow have more than doubled. But these remarkable achievements have also brought costly environmental, health and social problems (Conway and Pretty, 1991, Pretty, 1995, Pretty, 1998, Mason, 1996, EEA, 1998, Krebs et al., 1999).

Most economic activities affect the environment, either

Costing negative agricultural externalities

Although several attempts have been made to put a cost on some of the pollution arising from agriculture in the USA and Europe, it has proven difficult to do. First, it is necessary to know about the value of nature's goods and services, and what happens when these are lost. The current system of economic calculations grossly underestimates the current and future value of natural capital (Abramovitz, 1997, Costanza et al., 1997, Daily, 1997).

Second is the difficulty of putting a value on

Framework for assessing the negative externalities of UK agriculture

In this study, we use a framework of seven cost categories to assess the total environmental and health costs of UK agriculture. Two types of damage cost have been estimated: (1) the treatment or prevention costs (those incurred to clean up the environment and restore human health to comply with legislation or to return these to an undamaged state); and (2) the administration and monitoring costs (those incurred by public authorities and agencies for monitoring environmental, food and health

Why estimates of externalities are likely to be conservative

This study attempts to estimate the total external costs of UK agriculture. Given the multifaceted and dynamic nature of agriculture and its impact on environment and human health, we have had to make many assumptions about the data. In most cases, these result in conservative estimates of costs, though one (the BSE crisis) has inflated the costs above the long-term annual averages, assuming that the expected eradication of BSE does occur.

1.
Some costs are known to be substantial underestimates

Data sources and key assumptions

This study has drawn on 17 datasets collected and maintained by a wide range of agencies and authorities in the UK and rest of Europe:

1.
Office of the Director General of Water Services (Ofwat, 1992–1998) dataset of 28 water companies in England and Wales;
2.
British Crop Protection Association (formerly the British Agrochemicals Association) data (BAA, 1998);
3.
Department of the Environment, Transport and the Regions (DETR, 1998a) data on water pollution;
4.
Environment Agency (EA) data on both

Implications for policy

This study has shown that the total external costs of agriculture in the UK are substantial, comprising £2343 m, or 89% of average net farm income for 1996. This aggregate is equivalent to £208/ha/year averaged across all 11.28 m ha of arable land and permanent grassland (but not rough grazings). Pesticide externalities are £8.60/kg of a.i. used in agriculture, and £33/ha of land receiving pesticides. The problems associated with valuing non-market impacts mean that our estimates are

Acknowledgements

We are very grateful to many people for their insights and critical comments on material contained in this paper and for identification of various datasets, including in particular an anonymous referee and Thomas Dobbs of South Dakota State University, together with: Andrew Ball (University of Essex); Nigel Black (Health and Safety Executive); Roy Brouwer (University of East Anglia); Mark Borchardt (Marshfield Medical Research Foundation, USA); David Buffin (Pesticides Trust); Bob Evans

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An assessment of the total external costs of UK agriculture

Abstract

Section snippets

Definition and concept of externalities

Costing negative agricultural externalities

Framework for assessing the negative externalities of UK agriculture

Why estimates of externalities are likely to be conservative

Data sources and key assumptions

Implications for policy

Acknowledgements

Agriculture, Ecosystems and Environment

Crop Protection

Land Use Policy

Agric. Ecosys. Environ.

Geoforum

Valuing nature's services

Annual Review and Handbook 1998

The Theory of Environmental Policy

The position of the honeybee in the national economy

Annals of Applied Biology

The economic value of bees in the UK

Bee World

Unwelcome Harvest: Agriculture and Pollution

The value of the world's ecosystem services and natural capital

Nature

Outbreaks of foodborne infectious intestinal disease in England and Wales 1992–1993

Comm. Disease Report

Soil erosion estimates and costs

Science

Financiële waardering van de milieuschade door de Nederlandse landbouw — een benadering op basis van de preventiekosten. [Financial valuation of environmental hazard from Dutch agriculture — an approximation based on prevention costs.]

General outbreaks of infectious intestinal disease in England and Wales 1992–1994

Comm. Disease Report

Aquatic Eutrophication in England and Wales: A Proposed Management Strategy

Water Pollution Incidents in England and Wales 1997 Report

Europe's Environment: The Second Assessment. Report and Statistical Compendium

Soil Erosion and Land Use: Towards a Sustainable Policy

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General outbreaks of infectious disease in England and Wales 1995–96

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