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7.3 Economic implications of considering soil biology in decision-making for sustainable land management

In 1989, a review of alternative agricultural practices by the Board of Agriculture, National Research Council, USA, concluded the following:

The wide range of federal policies, including commodity programs, trade policy, pesticide regulation, water quality and supply policies, significantly influence farmers’ choices of agricultural practices. As a whole, federal policies work against environmentally benign practices and the adoption of alternative agricultural systems, particularly those involving crop rotations, certain soil conservation practices, reductions in pesticide use and increased use of biological and cultural means of pest control. These policies have generally made a plentiful food supply a higher priority than protection of the resource base.”

[Page 6, Alternative Agriculture, National Research Council, USA (1989)]

A change in focus from short-term production to long-term sustainability of the soil resource will not occur without incentive, particularly for land management practices that seek to enhance and rely on soil biological fertility. Currently most land managers who implement systems that improve soil biological fertility and aim to conserve the soil resource are driven by personal values that are not necessarily shared by society as a whole, as reflected in government policies. In many parts of the world, societies value production more than the less tangible outcomes that are more likely to lead to sustainable land use. There are various reasons for this.

What are the relative values of production and the soil biological resource base?

Products of the land have a well defined and accepted economic value. They are bought and sold in the market-place. However, the real cost of their production is generally not included in these transactions.

Currently, the real cost of production in any managed system does not take account of factors such as: (i) soil loss (especially its chemical and biological components) through wind or water erosion; (ii) the loss of fertiliser in excess of the needs of the plant to other parts of the (such as into rivers); (iii) the impact of increases or decreases in beneficial or detrimental soil organisms in terms of their potential to influence the following rotation, any increases in acidity of the soil; (iv) any increases in soil bulk density; or (v) the cost of ameliorating environmental degradation.

These are real costs to production. It is clear that soil organisms provide a wide range of benefits in soil and it is likely that if land management practices change so that soil biological fertility is enhanced, then many of the above costs will be reduced. However, because the above costs are not included in economic evaluations, neither are the benefits of soil organisms and their absence needs to be calculated in economic terms. Furthermore, while the above costs are not included in economic evaluations they will not be considered when society develops land-use policies.

What is the cost of developing and/or maintaining the soil biological resource base?

The benefits of practices that minimise soil loss or detrimental effects can be calculated in economic terms, thereby giving soil biological fertility a market-place value.

• If fertilisers are applied at levels that maximise contributions from soil organisms so that they fully utilise all the available nutrients, there will be a reduction in excess nutrients that can move into other parts of the ecosystem, such as rivers. The reduced cost of cleaning up rivers (if this is possible) because of fewer eutrophication problems can then be incorporated when calculating production costs. Because this reduced cost is due to soil organisms, the benefit of their contribution can be estimated.

• If soils are managed to maintain synergistic soil biological activity, the potential for pathogens to become dominant will be reduced. The cost of damage by pathogens can be estimated; the value of the absence of pathogens due to soil organisms can also be estimated.

• If soil organisms that reduce fertiliser needs (such as mycorrhizal fungi) are encouraged, the reduced fertiliser costs can be estimated.

• If organic matter is conserved, the long-term benefits in terms of nutrient cycling and soil physical characteristics can be calculated.

• If soils are managed to maintain biological fertility, the bulk density of the soil will decrease. The cost of this can be calculated.

• If soil acidity increases after growth of legumes or other practices, the reduction in the potential benefits from rhizobia or mineralisation can be calculated. Currently, soil acidity is known to develop in soils that have low biological fertility. The degree to which soil acidity is expected to increase in biologically fertile soils is less well understood.

There are many benefits of biologically fertile soils that have not been estimated. There is an urgent need to include these factors in economic equations.

Summary points (7.3)

• The current value of a product is clearly defined in the market place. Society accepts this, although the value of the product does not take into account a number of expensive costs of production (e.g. soil loss, excess fertiliser run-off).

• Many land use policies address only short-term production outcomes.

• A value can be placed on components of soil biological fertility.

• If biological components of soil fertility are given an economic value, there will be greater opportunity to develop policies that encourage land managers to implement practices that develop and maintain soil biological fertility.

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