Reducing Negative Externalities of Agriculture:

Author: Norm Woolworth

Agriculture is an indispensable but struggling part of the Vermont economy. Unfortunately, like most industries, agriculture has externalities. Agriculture runoff into waterways and eventually to Lake Champlain is one of its most significant negative externalities in the Lake Champlain Basin. This presents a problem because the most common way of combating externalities is through government regulation; however, regulation almost always adversely affects the profitability of an industry. We are left with the controversy either of allowing society to pay the costs of the externalities or, regulating and thus hurting a major section of the Vermont economy that is at the very heart of the state’s identity.

Best Management Practice

Here is an example of a best managment practice of including a buffer zone of trees between the farm fields and the adjacent waterway.

Vermont has attempted to reduce the externalities of agriculture through the creation of the Best Management Practices program (BMP’s). The program makes Vermont farmers eligible to receive available state financial assistance with the installation of on-farm improvements designed to control agricultural non-point source waste discharges (http://www.vermontagriculture.com/ARMES/BMP.htm). The program has been relatively successful in bringing down farmers costs of controlling their runoff. However, it still is a net cost for already struggling farmers.

Agricultural practices require the farmer to create an artificial ecosystem of sorts. Farm ecosystems are not isolated, they are an integral part of the greater ecosystem that surrounds it. When thought of as an isolated system, industrial agriculture is the most productive and efficient form of agriculture. This system involves significant nutrient inputs in the form of fertilizer, use of high yielding varieties of crops (sometimes genetically modified), and intense water usage. When thought of as a part of a bigger ecosystem though, many of those practices have negative externalities that outweigh the benefits of the extra production.

There has been much debate recently as to what the proper balance is between productivity and negative externalities. The debate seems to have stalemated as a value question, where neither side is right or wrong but just value things differently. However this discussion has been mired in the paradigm that the only way to reduce externalities is to reduce production. This paradigm can be broken. Negative externalities can be reduced while production increases (Swinton, Lupi, Robertson, & Hamilton, 2007).

Allowing agriculture waste to runoff into Lake Champlain and its neighboring waterways is both adversely affecting the ecosystem functions of the lake and is not an efficient use of the ecosystem structure of the farm. Phosphorus, the externality causing the most problems in the Lake Champlain Basin, is a nutrient and is only harmful in excess quantities. There are possibilities of using some of this phosphorus in production before it leaves the fields, consequently increasing production while reducing externalities.

The basic process would be planting a fast growing, phosphorus hungry plant with commercial value in select places at select times. It could be planted in strips along water sources or as a crop rotation. Dr. Keith Bolton, founder and managing director of Ecotechnology Australia, coined the term mop crop for crops that have commercial value while possessing the ability to help clean wastewater. Dr. Bolton has had the most success with fiber crops such as hemp, bamboo, and kenaf. His North Coast Mop Crop project produced enough hemp last growing season to build two 100% hemp houses. We can be fairly confident that hemp houses will never be widely built but hemp has significant commercial value (http://www.globalhemp.com/Archives/Government_Research/hawaiian_ind_hemp_report.shtml). Details about Dr. Keith Bolton and his projects can be found here (http://www.ecotechnologyaustralia.com/SlipPages/projects.php).

Hemp Field

Hemp is a choice plant for a mop crop.

This idea is much more appealing hypothetically than in reality. The primary deterrent of something like this is the transition cost to the farmer. A dairy farmer for example, wouldn’t have any of the machinery or knowledge to make an investment in a mop crop profitable for a long time. A corn farmer might have most of the machinery and knowledge to grow a mop crop but the income might be less than corn and therefore not smart for the farmer economically. Other costs must be factored in such as the social cost to someone who has to change their lifestyle.

The only way to curb the transition cost is through policy. If Vermont expanded its BMP program to help with the start up costs for mop crops they could do more with less by reducing negative externalities and giving farmers another source of income. Some policies create problems however. For example hemp, the mop crop Dr. Bolton has had the most success with, is illegal to grow in the United States.

Swinton, S., Lupi, F., Robertson, G., Hamilton, S. (2007). Ecosystem Services and
Agriculture: Cultivating agricultural ecosystems for diverse benefits. Ecological
Economics, Volume 62, Issue 2. Pages 245-252.

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