Environment ccr 2

Roles of Agriculture Project
International Conference
20-22 October, 2003
Rome, Italy
Environment Module
Roles of
Agriculture
Project
Agricultural and Development Economics Division (ESA)
Food and Agriculture Organization
of the United Nations

The Roles of Agriculture Project aims to extend current thinking about the
social, environmental and economic roles of agriculture in the development
process. For more than three years, the project has worked to establish an
analytical framework; to identify the social and economic roles for which the
market prices of agricultural activities fail to convey sufficient signals to secure
an optimal level of those activities; and to carry out eleven country case studies.
The case studies include Chile, China, the Dominican Republic, Ethiopia,
Ghana, India, Indonesia, Mali, Mexico, Morocco, and South Africa.
The ROA International Conference, October 20-22, provides an opportunity to
present and discuss research results from the eleven case studies and to draw
on the lessons, strengths and experiences learned over the past three years for
the design and implementation of future work. The country studies
consist of module reports (policy, environment, poverty, food security, buffer,
social viability, and culture) and a national summary report. This paper has
been prepared for presentation to and discussion by country case study team
members participating in the International Conference. It is a working draft.
The Roles of Agriculture Project is funded through a Trust Fund from the
government of Japan. The project is run by the Agricultural and Development
Economics Division of the Food and Agriculture Organization of the United
Nations. For more information on this Project or the Division and
its work, see the ESA website at www.fao.org/es/esa.

Environment Module Cross Country Report
Allali Khalil, Magdalena Lizardo, Randy Stringer
Paper prepared for the Roles of Agriculture International Conference
20-22 October, 2003 – Rome, Italy
Agricultural and Development Economics Division (ESA)
Food and Agriculture Organization
of the United Nations

Cross Country Report
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The Roles of Agriculture Project (ROA) aims to extend current thinking about the social,
environmental and economic roles of agriculture in the development process. This paper
represents the first attempt to draw out lessons, issues, results and experiences provided by the
11 ROA country studies focused on environmental externalities. Each of the 11 country
studies present: (i) a national level assessment of agricultural externalities (both positive and
negative); and (ii) site specific case studies providing qualitative and/or quantitative
assessments either of positive agricultural externalities or examples of a reduction in negative
externalities. This paper is prepared for presentation and discussion by the country case study
team members participating in the environmental module workshop at the ROA International
Conference 20-22, October 2003.
What are the objectives of the environmental module case studies?
The ROA environmental module includes two types of reports. The first report is an overall
national assessment describing the prevalence, pressures and policy responses to agricultural
externalities. The national assessment outlines how agricultural externalities impact on soil,
water, biodiversity air quality, and rural amenities. The reports consider both positive and
negative externalities. The purposes of this national level assessment are: to provide a broad
overview of the major agricultural-related environmental issues facing the country; to present
a policy landscape describing what policy models and tools are being used to address those
environmental issues, and to explain the pressures driving changes in agricultural practices
that induce positive or negative externalities. The intent is to understand the underlying causes
of sustainable and unsustainable agriculture, ie to what extent are technologies and
management practices that promote good environmental outcomes or bad environmental
outcomes encouraged by policy failures, market failures or institutional failures.
The second country environmental module report is a site specific study. The main purpose of
the site specific study is to quantify the value of agricultural externalities, including
measuring the non-market values. The existence of an agricultural externality suggests that
the agricultural practices or systems are either over producing, or under producing, some
goods or services1
. The site specific case studies attempt to examine how markets, institutions
and policies interact to produce ‘sub-optimal’ social outcomes, and estimate the value of the
externality. In the site studies, the emphasis is placed on the economic and environmental
impacts at the local, regional, national and global levels.
Three theoretical background papers provide the research objectives, guidelines, and
motivations of the environmental module (Landry and Mistiaen, 2002, Lopez 2002, and
McConnell 2002). Lopez provides an overall conceptual framework for the studies, outlining
how environmental impacts of agricultural growth depend on five conditions: (i) property
rights; (ii) the sources of agricultural growth; (iii) the types of policies used to stimulate
agriculture; (iv) government credibility; and (v) whether or not farmers are subsistence or
commercial. One aim of Lopez’s conceptual framework is to allow countries to be classified
based on the degree to which they satisfy the five conditions.
Lopez proposes a working hypothesis suggesting that the environmental consequences of
agricultural growth depend critically on the prevailing government policies and institutions.
Thus, a taxonomy based on these five conditions provides insights into the likelihood that
1
A related explanation is that society is over or under consuming goods or services that agriculture provides

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agricultural growth in a particular country is more likely, or less likely, to promote
environmental benefits. The environmental outcome, however, depends on the five prevailing
conditions, with the environmental impacts ranging from very positive to massively
destructive.
Lopez then postulates that agricultural expansion based on appropriate incentives is likely to
induce an environmental dividend if certain minimum institutional conditions are satisfied.
Many of these environmental services are externalities, neither taken into consideration by the
market, nor assessed by policymakers, nor represented in national accounts. Instead, other
sectors may benefit from positive agricultural externalities. However, in other circumstances,
agricultural growth based on inadequate incentives and weak institutions is likely to generate
massive negative environmental effects. One aim of using a typology based on the five
conditions outlined above to identify and correct the market failures, institutional weaknesses
and perverse policies to secure and enhance positive environmental outcomes.
Landry and Mistiaen (2002) and McConnell (2002) provide theoretical notes for the ROA
case studies that focus on the technical aspects related to choosing site study methodologies
and to using specialized economic techniques that measure non-market goods and services.
The aim of these two theoretical notes on methodologies, as well as other related background
materials, is to highlight the basic measurement principles, assumptions, data requirements,
and interpretation of results. The appropriate methodology to use depends on the site study
intent and the need to estimate values from observed market behavior or rely on direct
questioning of consumers. The site studies reflect a wide range of valuation techniques,
including market price methods, replacement costs methods, travel costs methods, hedonic
price methods, and contingent valuation methods.
What are the pressures driving changes in agricultural externalities?
The ROA case study countries are a heterogeneous group of countries with diverse resource
endowments, income levels, and agricultural structures. Their agricultural sectors vary widely
both among and within countries. Likewise, the prevailing government policies and
institutional conditions that shape environmental consequences of agricultural growth vary
across and within the countries. However, the module reports suggest that countries do share a
number of similar characteristics, trends, and pressures that are influencing agricultural
practices and the impact those practices have on environmental externalities.
How the five prevailing conditions suggested by Lopez are addressed are fundamental to
understanding the environmental outcomes from these pressures. Among these common
forces that are interacting with government policies and institutions to produce positive and
negative environmental impacts are: expanding globalization and trade; agricultural and
sector-wide policy reforms; technological advances; and substantial changes in relative prices
leading to more intensive, more specialized, and more concentrated production and
distribution systems. Four driving forces are presented here for discussion at the workshop.
First, globalization pressures, including international development community pressures to
integrate environmental objectives with agricultural objectives is making the agricultural
sector policy agenda more complex than ever in the case study countries. International and
domestic pressures are forcing policymakers to search for the right combination of

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socio-cultural measures to improve rural areas, promote economic incentives to increase
resource efficiency, and environmental regulations to protect soil, water, food and farm
workers.
During the years following the United Nations Conference on Environment and Development
(UNCED), the international community’s guiding principles on sustainable development has
increasingly implied that agriculture should widen its focus from expanding production and
increasing yields to include sustainable management of ecological processes, environmental
services and social goods. While these objectives are not necessarily incompatible, some
trade-offs are inevitable. Despite its message of harmony, the concept of agricultural
sustainability raises tension between market-driven economic growth strategies, social
pressures for a more equitable distribution of economic opportunities and the need to maintain
environmental productivity, ecological services and biodiversity to fulfill future economic and
social aspirations.
Second, most of the countries have signed onto a variety of multilateral environmental
agreements (MEAs), including conventions and treaties on desertification, biodiversity,
climate change, forestry and fisheries. The ROA case study countries are participating in
various international bodies to harmonize criteria and codes of conduct for farming practices.
If enacted fully, these commitments in the international arena have important consequences
for agricultural production and rural development.
Over time, MEAs have become increasingly specific, setting out detailed strategies and
procedures, establishing measurable objectives and standards, and setting precise dates by
which signatories must comply. Compliance often requires changes in national legislation,
state and local regulations, tax policy or regulatory systems. For the ROA countries, concerns
over environmental agreements are analogous to concerns over domestic standards and
environmental controls that influence production costs, shift relative factor prices, and thereby
affect short-term competitiveness, export performance and jobs.
A third common pressure influencing environmental outcomes is the regional and global trade
initiatives encouraging countries to integrate national level political, economic and
environmental institutions with those at supranational and global levels. These initiatives include,
for example, a revival of regionally-based arrangements (eg, AFTA, ASEAN, APEC,
MERCOSUR, NAFTA), and further economic integration through the WTO.
China, Chile, India, Mexico and South Africa represent examples where these trade initiatives
have had some positive environmental outcomes in local areas. Two important reasons
explaining the positive outcomes are (i) the increased demand for safe and uncontaminated
foods and (ii) increased demand for sustainable production practices. The export markets in
ROA countries are concerned more and more with the safety, nutritional quality, freshness and
diversity of their food exports. As a result, producers and exporters are increasingly occupied
with meeting higher standards for health and safety, and levels of pesticides, contaminants,
naturally occurring toxicants, as well as chemicals added for ripening and/or storage.
The increased demand for sustainable production practices is related to higher incomes (both
within the ROA countries and in those countries importing their exports) imply high income
elasticities of demand not only for safe foods, but also for environmental goods, such as
environmentally-friendly production practices. Consumers are now concerned about whether

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production and distribution processes entail environmental damage, including land and water
degradation, biodiversity loss, and packaging waste.
As pointed out in the Mexico case study, green certification and ecolabelling programmes
represent one important market response to the demand for environmentally-friendly practices
and healthy products. Ecolabelling attempts to capitalize on the price premiums consumers
are willing to pay for both the private good of safe food and the public good of an improved
environment. While producers have marketed the nutritional attributes of their products for
some time (such as health benefits of organic produce), only recently have they begun to
market sustainable practice attributes.
In the ROA countries where food exports are aimed at high income countries, the public and
private institutions are building up a range of signaling mechanisms to pass on key
information to support producers. These signaling mechanisms include: reliable product
information on evolving consumer preferences; easier access to documentation on import
requirements by commodity and by country; and research and extension networks that
encourage resource conservation practices by commodity. For producers who market a great
deal of their food production in designated premium markets (ie, those markets with the
highest food safety and environmental standards, namely the EU, Japan, Korea and the US)
where import requirements often vary significantly between these countries, food producers
are developing procedures to react to changes within and between markets.
A fourth factor facing the ROA countries is that, in general, poverty is heavily concentrated in
rural areas. Many rural poor live and work in ecologically fragile, economically marginal and
environmentally-degraded areas. Protecting environmentally-vulnerable areas and making
them more productive requires long-term investments. Poor and subsistence producers in
fragile areas lack the capital necessary to invest in natural resource protection; they tend to
have high rates of time preference; and, normally, are unable even to avoid the impacts of
environmental degradation on their existing production base. This deterioration in the
production potential of natural resources is a major concern for ROA countries’ future food
security.
Poverty often induces food producers to degrade natural resources and environmental services
even though they depend heavily on a sustained resource base for survival. At the same time,
government programmes and policies aimed at alleviating poverty often contribute to
environmental degradation by directly encouraging or unintentionally subsidizing
environmental degradation. Further resource degradation contributes to more rural poverty,
urban migration and erratic food production. For poor rural communities at the margin of
subsistence, resource degradation means greater food production instability as the frequency
of poor harvests increases.
As poverty reduces and incomes grow, the general tendency is for the demand for
environmental quality to increase. Less polluting agricultural techniques become more viable
while the political willingness to enact more stringent environmental regulation may increase.
The environmental policies that a country could adopt to promote the internalisation of
externalities also include incentives to promote those activities that yield positive
environmental effects. How environmental outcomes change with rises in per capita income is
an important issue, but what is of more fundamental concern for the ROA project is how
different policies affect this relationship.

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How are the countries managing agricultural externalities?
This section presents an initial list of environmental management responses gleaned from the
country cases. At the most general level, environmental management include three areas: (i)
integrating environmental concerns into policy decision making; (ii) modifying existing
policies to reduce negative environmental consequences; (iii) promoting local, national,
regional and global initiatives. There may be examples of countries actively promoting an
identified positive externality.
The most common types of policy interventions tend to be either extension and advisory
measures or regulatory measures, eg, bans, standards, or labeling requirements. Economic
instruments such as taxes, subsidies or tradable quotas are rare in the cases presented. Chile
and Mexico have enacted tradable water rights systems. The extension programmes include
promotion of alternative agriculture production systems and integrated pest management.
Despite greater the growing understanding and recognition of the importance of
environmental policies, few systematic evaluations exist to determine which policy responses
are relatively more efficient and which policy choices are relatively more cost effective. So
too are studies aimed at quantifying the distributional consequences of alternative policy
choices. Several reasons may explain why. First, most environmental programmes and
policies aimed at the agriculture are recent. Second, technical difficulties associated with
evaluating one particular policy when it forms part of a larger policy package. Third, a lack of
data and/or evaluation culture and practice. Fourth, choosing appropriate alternatives with
which to compare policy performance. Fifth, the non-point source nature of agricultural
pollution. And, sixth, incompatible division of responsibilities among government and donor
agencies.
What are we learning from the site studies?
Table 1 summaries the measurement techniques and environmental issues analyzed in the
ROA country case studies. Three groups of studies emerge. The first group includes the use of
willingness to pay estimates of positive externalities using contingent valuation, travel cost
and hedonic pricing methods. The positive externalities are green house gases (GHGs), agro-
tourism, agro-forestry benefits and rural amenities. The second group of studies employ
similar non-market measurement methodologies or econometric techniques to quantify the
value of reducing negative externalities or the willingness to pay for reduced pollution: GHGs,
water pollution, and soil degradation. The third group of studies employs a variety of
techniques, including the Delphi technique (Chile) to better understand expert perceptions of
agricultural related environmental externalities, or economic and market assessments of how
changing agricultural practices impact on the environment.
Each ROA case study represents a unique example yet each country could provide and
seemingly endless supply of additional site studies and information. The final section of this
report provides a brief overview of each reports objectives and conclusions. What may be
useful here is to glean some methodological lessons from the studies and draw lessons for
future work. This is an important objective of the workshop.

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The following issues are proposed for discussion:
a) The lack of basic information on damage caused by agricultural practices is a rather
big issue. More than almost any sub-discipline in economics, environmental
economists are dependent on information from ecologist, environmentalist, biologists
and other scientists to provide the threshold damage information. This information is
often lacking in many of the most data aggressive Industrial countries. It represents a
more serious problem for developing counties.
b) The need to capture the entire set of external values form field level, to global level.
For example, reducing land degradation can result in increased productivity at the
household level, better flood control and less sedimentation at the regional level,
improved food security at the national level and an improved carbon sink and
ecosystem at the global level. All these values need measuring.
c) The need to assess net costs and benefits and to examine the opportunity costs of the
sites. In addition, the need to computing shadow prices for natural resource stocks
d) Better understanding of linkages between macroeconomic variables, economy wide
variables and the environment (eg Green Gross National Product, sectoral green
accounts; indicator-based approaches: wealth and genuine savings, and performance
indicators

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Country Summaries
The charming landscape which I saw this morning, is indubitably made up of
some twenty or thirty farms. Miller owns this field, Locke that, and Manning
the woodland beyond. But none of them own the landscape. There is a
property in the horizon which no man has but he whose eye can integrate all
the parts, that is, the poet. This is the best part of these men’s farms, yet to this
their land deeds them no title.
Ralph Waldo Emerson, Nature (1836)
Chile (Ramón López and Gustavo Anríquez)
The first Chile case study considers both negative and some positive environmental
externalities of Chilean agriculture. The paper presents a case study for an important
watershed in Chile, the Aconcagua Valley, and an econometric analysis of input demand by
Chilean agriculture. Two positive environmental externalities are identified erosion protection
in sloped and vulnerable areas and carbon sequestration services estimated at about $2 million
per year, roughly, 3 percent of the value of avocado exports.
The paper concludes that agricultural induced water pollution in the in the Vth
Region of the
Aconcagua watershed, both ground and surface water, is significant but not yet critical. The
region is one of the most productive agricultural regions in the country and the contribution of
agriculture to water pollution appears to be rather moderate. The most important agriculture
contribution to water pollution is pesticide traces found in surface water. Nitrate fertilizers
may be one source of the high nitrate content found in ground water.
The paper also presents an empirical assessment of the evolution of chemical input demand
by the agricultural sector, as a proxy for emissions, using time series to estimate a system of
input demands for the Chilean agriculture. One important finding is that nitrate fertilizers are
good substitutes for pesticides. The increasing export orientation of agriculture has reduced
the pesticide dependence of agriculture. The rapid rise in pesticide demand is mostly due to a
reduction in the relative price of pesticides compared to other inputs. The econometric
analysis suggests that given the high price responsiveness, a modest tax on pesticides can be
very effective in reducing the pesticide/output intensity and in thus diminishing one of the
most important negative environmental externality of agriculture.
Chile (Raúl O´Ryan, Manuel Díaz, and Cristián Pincheira)
This study uses a modified version of the Delphi Method to obtain the perceptions of
qualified respondents, in particular the positive environmental externalities and reduction of
negative externalities.. This methodology does not require extensive data, usually unavailable
in developing contexts. The study includes two areas –the semi-arid IV Region and in the VII
Region with a mild Mediterranean climate – to identify common features as well as
differences in the development process.
The study results show that the drivers of change in both Regions are very similar. Economic
drivers that have been critical are economic openness, high exchange rates and the installation
of food export businesses and cold storage plants in the Regions have been critical. Also

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important are technological drivers associated with better water management and efficiency,
and sectoral policies, specifically better road infrastructure. The main sources of growth can
be characterized as neutral in both Regions, since they affect factor productivity across the
board.
The results show significant regional differences in the perceived externalities. Forty-nine
externalities, nineteen positive (or a reduction of a negative) and thirty negative externalities
were consulted. In the IV Region 13 positive externalities and only 10 negative ones were
perceived by the majority of respondents to have increased. However in the VII Region only
10 positive externalities were perceived to increase whereas 27 of the 30 negative externalities
were considered to be present by the majority of the respondents.
Some positive and negative externalities appear in both Regions. There is significant
agreement that land quality has improved, agro-tourism, eco-tourism and gastronomical
tourism are important positive externalities in both Regions. Landscapes improve in both
Regions but a greater majority agrees that this is so in the IV Region. On the negative side,
three biodiversity implications are considered relevant in both Regions: reduction and
transformation of natural habitats and disequilibria in the tropical chain due to clearing of
native vegetation and loss of genetic variability due to mono-crops. Air pollution generally is
not perceived as a relevant externality in any of the Regions. However, bad odors generated
by production and damage to health of workers due to exposure to agrochemicals and
pesticides are also present. Some externalities specific to each Region were also identified.
Finally, the results support, with some caveats, the proposal by Lopez (2002) that neutral
sources of growth coupled with stable property rights and a perception of permanence of the
transformations should lead to improved soils and water supply/balance conditions.
China (Yao Lu and Dongmei Guo)
The China site study examined water-related externalities in a rice-wheat farming system
located in the middle and lower reaches of Yangtze River. The study includes a review of
biological and physical environmental pollution and a household survey in Zhenjiang City
estimating the value of environmental externalities caused by agriculture. The pollution
indicators include: (i) total CH4, N2O and CO2 emissions; (ii) the average nitrogen and
phosphorous discharged into water systems from non-point sources; and (iii) the total carbon
sequestration of water in paddy fields and in dry lands.
An economic evaluation is carried out to estimate willingness-to-pay (WTP) on the basis of
site-surveys in Zhenjiang including more than 400 respondents. Results suggest that the
externality of chemical fertilizers from rice-wheat farming system to drinking water is valued
as 255 RMB per household per year, 2% higher than that of average household income.
The survey work suggests that, generally speaking, respondents are more sensitive to the
negative agricultural externalities than the positive ones. The descriptive statistics of the
survey that we have carried out in Zhenjiang, Jiangsu Province testifies it well as followings:
a) 66 percent of the respondents think that chemical fertilizer use has negative environmental
impacts, while only 28 percent think that organic manure has negative impacts;
b) 88 percent of the respondents think that pesticides may cause environmental damage;
c) 56 percent answered that agricultural activities cause soil erosion and sediments in lakes

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and rivers;
d) 20 percent of the respondents think that rice farming is favorable to the flood prevention;
e) 50 percent of the respondents think that rice farming systems provide amenity services;
f) 19 percent of the respondents think that rice farming system provide habit to the wildlife;
g) 43 percent of the respondents think the water pollution prevention is the most important
issues among the environmental externalities of agriculture.
Dominican Republic (Alejandro Herrera Catalina and Magdalena Lizardo)
The Dominican Republic study attempts to analyze the links between agriculture and tourism.
The study involves using contingent valuation methods to assesses tourists’ willingness to pay
(WTP) for the enjoyment of agro-tourism and for the existence of agriculture’s positive
externalities. In addition, the study analyzes the factors that could impinge on tourist’s
preferences and valuation in the Dominican Republic (DR).
Among the factors influencing tourist’s behavior are income, location of the tourist
destination, gender, and nationality. The study highlights an agro-tourist typology’s
conceptualization. It also presents an estimation of the potential income from agro-tourism.
This estimation considers different WTP scenarios according to different farming systems and
the existence of positive externalities, as created by agricultural practices’ efficient use of
water, soil, forest, landscape, rural culture, and agro-biodiversity conservation. The paper
argues that a thorough development of agro-tourism would represent an effective market
mechanism to measure income that the country does not currently perceive, with a value that
varies between US$251.0 and US$364.0 million annually. At the same time, agro-tourist
activities would contribute to define a new role for agriculture, promoting sustainable
practices.
Among the studies specific findings and conclusions are:
(i) that tourists interested in participating in agro-tourism in the DR are basically motivated by
the cultural experience. People who like agro-tourism are also highly motivated to explore
local cultures, and to practice eco-tourism and sports tourism;
a) a tourist's WTP for agro-tourism in the DR increases as his or her level of income
increases, and it is higher among both women and people younger than 40 years.
Tourist’s, WTP is lower for tourists traveling with children;
b) systems of sustainable production supply the types of amenities preferred by agro-
tourists, fundamentally those relative to lifestyle and rural culture. No single amenities
has a particular influence on the determination of WTP. The WTP for amenities linked
to a rural setting correspond to the integrated value of all the amenities that define
preferences for a rural setting;
c) agro-tourism offers the potential to involve in some way 78 percent of the tourists that
visit the DR, who can also be attracted by the existence of positive externalities
associated with the adoption of conservationist farming practices;
d) the economic contribution of agro-tourism and the existence of positive externalities
associated with conservationist farming practices could exceed US$251 million
annually, which would represent 8.4 percent of the tourism income in 2002 and 10%
of the farming GDP. The more optimistic scenario indicates that the income generated
could be as much as US$364 million, which represents 12% of the tourism income in
2002 and 14.1% of the farming GDP; and

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e) agro-tourism might represent a very useful option to satisfy both immediate and future
priorities associated with the goals of sustainable development by linking agriculture
and tourism in the DR. An initial strategy to develop agro-tourism in the short-term in
the DR should consider the need for better infrastructure and personal security for
agro-tourists in the rural areas and an effective negotiation with tours operators with
the objective of promoting this new tourist market for the DR.
Ethiopia (Eyasu Elias)
The Ethiopian study presents two cases. The first examines on-farm conservation of genetic
diversity in the enset-coffee system and its economic value. The second study values the off-
farm impacts of soil erosion and siltation on a hydropower dam. The study of on farm
conservation of genetic diversity documented and quantified the inter- and intra-species
diversity maintained by subsistent farmers in the enset-coffee farming systems in Ethiopia.
Where possible, the study attempted to quantify the economic value of environmental services
generated by agricultural bio-diversity. The case study provides an example of and evidence
for a positive environmental externality of traditional agriculture in Ethiopia.
Questionnaires were administered to 100 sample households disaggregated by wealth group –
rich, medium and poor. Key informants categorised households into three wealth groups using
livestock ownership as local criterion of wealth. The questionnaire captured (a) the social and
economic profile of households such as ownership of productive assets and family size that are
considered as main factors that encourage or discourage level crop diversification; (b) on-farm
agricultural diversity (i.e., inter-and intra-species diversity) at farm level; (c) understanding and
documenting the socio-economic and cultural values of traditional on-farm conservation of
genetic resources particularly that of traditional crops such as enset; (d) household level
variations in the poly-culture system mediated by socio-economic factors mentioned earlier.
The case study points out that farming activities in the enset culture contribute to the on-farm
conservation of agricultural diversity that provides concrete evidence for positive
environmental externalities and public services that benefit the welfare of society. Thus, the
enset-coffee farming system was selected as relevant in the national context to empirically
analyse the role of traditional agriculture in conserving and managing crop genetic resources
and its benefits to the rest society and economy at large. Among the issues the study
examined include: food security value at household level with respect to aggregate crop
productivity; environmental/ecological services such as soil erosion control, expensive
chemical fertilisers use avoided and costs saved by other sectors (outside agriculture); averted
production losses and catastrophic effects (e.g., due to disease outbreak); and provision of
genetic stock for international crop improvement breeding for the welfare of present and
future generations.
The second Ethiopian study quantifies the biophysical nature of soil erosion and estimates the
off-site costs due to the erosion agricultural lands upstream of the Koka dam. The aim is to
understand the economic impact on the reservoir due to silt accumulation. Using secondary
data and survey information, the paper illustrates the negative environmental externality of
agriculture affecting the welfare of non-agricultural dependent households.
A household level survey was carried out to assess the agricultural practices and the rate of
soil erosion at farm level in the upstream catchment. A questionnaire focused on agricultural

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land management practices. The questionnaire captured soil and water conservation practices
and farmers perception of the extent of soil erosion hazard on their farms and socio-economic
variables that mediate decisions on land management. A stratified random sample of 100
households was selected based on wealth status (rich, medium, poor). Livestock ownership
particularly that of draught oxen ownership was the major local indicator of wealth used by
key informants to stratify households.
Physical quantification of sediments accumulation and valuation of its economic cost was
achieved using secondary data generated by earlier studies, namely, batyhmetric surveys and
runoff measurements gauging stations in the Upper Awash catchment. The study found that
the Koka dam has lost about 30 percent of its designed storage volume to siltation, losing
power generation capacity and increasing greatly maintenance costs.
Ghana (A. Wayo Seini, George Botchie, and Lawrence Damnyag)
The Ghana case study analyses the major environmental externalities generated by the semi-
deciduous forest and the Sudan savannah farming systems. The major attributes of the semi-
deciduous forest zone farming systems comprise permanent tree crops and rotational bush
fallow of food crop farming systems. The interior savannah zone is characterized by a mixed
farming system, comprising food crops and livestock. The two zones represent distinct
farming systems known for major agro-forestry activities. This study examines the
externalities produced in these two agro-forestry systems.
The studies uses contingent valuation methods and replacement cost methods to estimate the
dimensions of the environmental externalities. A CVM questionnaires was structured to
capture the maximum amount of money the respondent are willing to pay for the overall
benefits provided by: improvement of scenery, prevention of soil erosion, improvement of
wild life habitat, supply of fuel wood, preservation of soil fertility, improvement of water
retention and increase of soil fertility, arising from a hectare of an agro-forestry farm. The
research team also carried out in-depth interviews with selected stakeholders. These in-depth
interviews and secondary sources provided us with the information and data required for the
recovery cost estimation of environmental functions.
The CVM valuation showed that, in the case of the semi-deciduous farming system. The
gender of the farmer and the age of the farmer were the most important factors influencing, the
willingness to pay for improved scenery, increased soil fertility, improved water retention, and
prevention soil erosion.. The age of the farmer is highly significant at the 1 percent level and
gender is significant at the 5 percent level. On the other hand, the significant factors
determining the maximum willingness to pay in the Sudan Savannah farming system is
household income and age with willing to pay for supply of fuel wood and age.
The replacement cost valuations suggest that in the long run, it is more expensive to restore
environmental attributes through measures that include dam construction and agro-forestry in
the Sudan savannah, than simple agro-forestry projects that rely on rainfall conditions (forest
system) as well as supplementary irrigation from hand-dug wells (savannah system).
India (Vijaylaxmi Pandey)
The India report explores the environmental and economic benefits from adopting more
environmentally-friendly tillage techniques, including zero tillage (ZT). The study measures

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input savings for wheat, producer their perception about ZT technology, and the
environmental impacts of these technologies. Farmers perceptions are considered as important
to understanding how new techniques contribute to reducing negative environment
externalities of agriculture and for making them more popular.
The specific aims of the study are: (i) to examine the environmental impact of ZT in wheat
crop at the farm level; and (ii) to understand the perception of farmers regarding ZT. A survey
was carried on in two states; one at an advanced stage of agricultural mechanization and
intensification, the other at a lower stage of agricultural development. Haryana state has long
benefited from green revolution technologies so represents the developed and irrigated
agriculture site. In Bihar state, the spill over effects of the green revolution are percolating
gradually, so it represents the lower level of agricultural advancement site. Two districts,
Kaithal and Begusarai, respectively from Haryana and Bihar were selected. From the selected
districts equal number of both, adopters and non-adopters are surveyed.
The total sample size is 400 farmers, with distribution of 200 adopters and 200 non-adopters
of ZT. Inverse sampling technique was employed to select the households. The data were
collected in collaboration with Rice Wheat consortium for the Indo Gangetic Plains (RWC).
The questionnaire was tested and modified after the pilot survey in the field. The information
recorded from the farmers include different input use in the field and different farming
operations performed. Perceptions about ZT were recorded from both adopters and non-
adopters for different set of questions. Net savings were calculated for the wheat crop. The
conversion factors were used for physical quantification of the environmental benefits.
The results suggest that ZT adopters tend to be younger and their main source of livelihood is
agriculture. The data show that both intensive and less-intensive agriculture experience an
increase in yield by following ZT or reduced tillage (due to drought in the year 2002), but it is
observed to be 3 percent higher for less-intensive agriculture (Bihar) than intensive agriculture
(Haryana). The net savings is greater in less-intensive agriculture (Rs 701.14/ha more in
Bihar). This demonstrates scope for widespread of ZT and reduced tillage techniques in the
coming years in less intensive agricultural areas. From the environmental view point, ZT and
reduced tillage saves emission of green house gases. Further, the amount of water used for
agriculture is reduced by 20 percent.
Indonesia (Fahmuddin Agus and Made Oka A. Manikmas)
The Indonesia site study focuses on three sections of the Citarum River, the upstream section
located in Bandung District, middle stream in Cianjur District, and down stream area in
Karawang District. All three sites are located in Indonesia’s West Java Province. The study
estimates different types of non-market values, making use of three measurement methods:
the Travel Cost Method (TCM) to measure the value of rural amenities; the Contingent
Valuation Method evaluates the willingness to pay for environmentally sound agricultural
programs; and the Replacement Cost Method (RCM) is used measure the trade off between
economic values of agricultural land use and environmental services. The TCM involved 120
respondents and the CVM involved 180. The RCM relied on secondary data backed up with
group interviews to substantiate the information.
The travel cost study found the willingness to pay for visits to Jatiluhur Dam is significantly
more attractive than Cirata Dam. This reasons include: (i) closer to Jakarta and has better

13
facilities; (ii) more alternatives for recreational activities are possible; (iii) Jatiluhur has better
promotion to attract visitors; (iv) Jatiluhur is the biggest and the oldest Dam in West Java; and
(v) Jatiluhur is more accessible than Cirata.
The CVM found that both professional and farmers willingness to pay for environmental
programs in the upstream area was highest for reforestation programs, followed by agro-
forestry, terracing and alley cropping. In the middle stretch of the river, professionals were
willing to pay more for reforestation, but farmers were willing to pay more for alley cropping.
From all raised environmentally sound programs, either professional or farmer ready to pay
the largest amount for irrigation and drainage system programmes in downstream areas, while
supporting reforestation programmes upstream of Citarum.
Some 37 percent of the total economic value of agricultural land in the Citarum river basin is
provided by marketed products. About 73 percent is contributed by the economic value of
land in conserving the environment. Without conservation and this region would experience
an estimated economic loss of not less than US $2.65 billion/year.
Mali (K. N’Diaye, A. Kouriba, L. Diarra, O. Kergna, Hugo Verkuijl)
The objective of the Mali study is to document a number of important irrigation-led changes
that have taken place in the delta of the Niger River where the Office du Niger (O.N.) was
created in 1932. The major impact of the delta river scheme is the transformation of an arid
area into a humid and densely populated ecosystem of primary economic, demographic and
social importance. Thanks to the irrigation, a viable habitat with rural development has been
created with important contributions to poverty reduction. Household food security and
income have increased through direct physical access to food and through the diversification
of income sources.
The study points out that most impact studies highlight water use efficiency difficulties. The
O.N.’s irrigation efficiency (ie, the share of the water diverted from the river that is
effectively used by plants) ranges between 40 and 60 percent. Waterlogging is contributing to
salinity and related soil problems, reducing productivity. On the other hand, the rise in the
water table has significant positive spillovers which this study highlights and quantifies.
Among these positive benefits are: (i) the re-use of drainage water for rice and other
production with substantial market output; (ii) a number of social and environmental benefits
can be observed which are not mediated through markets. One of these is a greatly facilitated
access to water for domestic use by the ever growing population which dramatically reduces
labour and costs related to domestic water supply; (iii) the rise in the water table makes tree
growing and re-forestation possible alongside the irrigation plots, producing wood for the
local communities, and has contributed to the viability of orchards plantations and
horticulture, which in turn provide enhanced living conditions, a micro-climate, local wood-
related businesses, as well as improved nutrition; and (iv) the use of drainage water has led to
the creation of a number of villages along major drains where the water is used for cattle,
horticultural production, and the abandonment of millet in favour of rice.
The study notes that the O.N.’s development causes negative externalities such as malaria
incidence increases and impacts on the Niger’s delta water balance and ecosystems
downstream the O.N. A major positive externality is the creation of a cultivated eco-system,
related to national food supply and to household food security (the latter being enhanced

Environment
14
through direct physical access to home grown food). Poverty trends at the national level are
positively affected by the revitalisation of the O.N.
Mexico (María Eugenia Ibarrarán, Enrique Guillomen, José Iván Rodríguez)
The Mexico study analyses the rise or organic coffee production to assess agricultural
contribution to positive environmental externalities and sustainable agriculture, The study
compares organic coffee production practices with the conventional methods. The objective is
to distinguish positive environmental externalities that emerge from organic agriculture in this
particular case.
Mexico is a leader in organic agriculture, exporting to Canada, Europe, Japan and the US.
Mexico is the world’s fifth largest coffee producer, after Brazil, Colombia, Indonesia and
Vietnam, but the world’s largest producer of organic coffee, and one of the first to produce
"gourmet" coffee. Coffee is produced on a total of 690,000 hectares in 12 states in the central-
south part of the country. It is grown in the shade with care being taken to protect the
ecosystem. Mexican coffee growers, therefore, produce positive environmental externalities
through soil, water, and ecosystem protection.
The study examines a commercial firm, Ecole-Café, involved in the production of organic
coffee. The main environmental benefits derived from this project are a reduction in the use of
chemicals and fossil fuels, and substitution of these for renewable resources and natural
fertilizers. In addition, Ecole-Café increases carbon sequestration and provides natural
settings for migratory birds to stay during their journey during the winter. It provides a clear
example of how business and environmental protection can go together.
An important message emerging from this case study is that organic agriculture promotes the
rational use of natural resources. While initially, organic coffee production was sustained
through making use of traditional practices, it has evolved quickly to incorporate more
scientific knowledge involving complex practices. Although limited, this case study shows
how these integration techniques can be attained.
Sustainability implies satisfying necessities in the present without compromising the well
being of future generations. This study suggests that extending organic agriculture techniques
to produce food and other agricultural products based on protecting natural resources makes
economic and ecological sense. The study further concludes that more research should be
directed at appropriate technologic option to attain sustainable development through organic
production, aimed at lowering the costs of production practices and international certification
requirements.
Morocco (Allali Khalil)
The Morocco environmental module examines two separate cases. The first use contingent
valuation techniques to measure rural amenity associated with agriculture. The second uses
hedonic pricing techniques to estimate the value of agro-tourism. These studies are being
translated into English from French and will be discussed at the Conference workshop.

15
South Africa (T.E. Kleynhans)
The South Africa study analyses the causal links between agricultural practices and
environmental outcomes in several locations around the country. The study focuses on how
institutional factors influence agricultural practices and the resulting environmental impacts.
The study concludes that the South African government, together with semi-governmental
agency influences on agricultural education, research and extension have all contributed to
enhancing a culture of environmental and sustainable production awareness and promoting
appropriate technologies that to implement sustainable production.
These investments in human capital, soil and veld conservation programmes, and
conservation legislation have resulted in measurable improvements both in various
environmental health indicators, including biodiversity and soil quality. This institutional
influence has had a far greater effect on agricultural practices in the commercial farming areas
than in the communal farming areas. A fact reflected clearly in the findings of the national
study on soil and veld degradation.
A second major influence in environmental outcomes has been the retail food chains selling
fruit in the northern hemisphere. These food retailers have exerted their dominant bargaining
power upwards along the supply chains to export oriented deciduous, citrus and subtropical
fruit farms, encouraging environmentally beneficial changes in production practices along the
way. The study suggest that these positive changes have the intensive perennial crop
production areas of South Africa have been much faster with the commercial retail good
exporters chains than what is attained via government legislation.
The most effected agricultural practices during the past ten to fifteen years have been: (i) the
adoption of less tillage and the use of tooth implements; (ii) more careful fertilization of
cropland based on soil sample analyses and fertigation of perennial crops; (iii) more careful
crop protection by using less toxic and less quantities of insecticides and fungicides, reducing
greatly the active ingredients per hectare. Other innovations include narrower plant spacing,
better seed and fruit cultivars, virus free plant material and better livestock breeding stock.
The national overview shows either a slow down in the rate of soil and veld degradation, or an
actual improvement of soil and veld and thus biodiversity conditions in commercial farming
areas. The groundwater quantity, rather than quality, appears to be more of an issues in the
drier areas. In the wetter areas, where more intensive agriculture is found and thus more
fertilization takes place, various factors - such as the number and distribution of measuring
points - complicate efforts to identify agriculture as the major cause of deteriorating ground
water and surface water quality. Agricultural impacts on air quality in South Africa is not a
critical issue. The influence of agriculture on rural amenities in South Africa is unclear.

Environment
16
References
Agus, Fahmuddin and Made Oka A. Manikmas, (2003), Indonesia Environment Report,
Paper prepared for the Roles of Agriculture International Conference, 20-22 October 2003,
Rome, Italy.
Allali, K., (2003a), Externalités Pécuniaires Positives de l’Agriculture sur le Tourisme de
Montagne au Maroc: Application de la Méthode des Prix Hédonistes au Marché des Gîtes
Familiaux du Haut Atlas Occidental Marocain, Paper prepared for the Roles of Agriculture
International Conference, 20-22 October 2003, Rome, Italy.
Allali, K., (2003b), Valeur Sociale de la Conservation du Paysage Agricole au Maroc:
Application de la Méthode d’Evaluation Contingente au Paysage Agricole de la Chaouia,
Rome, Italy.
Diarra, L., O. Doumbia, A.O. Kergna, A. Kouriba, M. KN’diaye and H. Verkuijl, (2003),
Analyse des Externalités Environnementales des Deux Systèmes de Productions Ciblés, Paper
prepared for the Roles of Agriculture International Conference, 20-22 October 2003, Rome,
Italy.
Elias, E., (2003a), On-Farm Conservation of Genetic Diversity in the Enset-Coffee System
and its Economic Value (An Example of Positive Environmental Externality of Agriculture),
Rome, Italy.
Elias, E., (2003b), Off-Farm Impacts of Soil Erosion: Siltation in the Hydropower Dam (An
Example of Negative Environmental Externality of Agriculture), Paper prepared for the Roles
of Agriculture International Conference, 20-22 October 2003, Rome, Italy.
Ibarrarán, M.E., E. Guillomen and J.I. Rodríguez, (2003), Environmental Roles of Agriculture
in Mexico: Case Study of Organic Coffee Production in Mexico, Paper prepared for the Roles
of Agriculture International Conference, 20-22 October 2003, Rome, Italy.
Khalil, A., (2003a), Externalités Pécuniaires Positives de l’Agriculture sur le Tourisme de
Montagne au Maroc: Application de la Méthode des Prix Hédonistes au Marché des Gîtes
Familiaux du Haut Atlas Occidental Marocain, Paper prepared for the Roles of Agriculture
Khalil, A., (2003b), Valeur Sociale de la Conservation du Paysage Agricole au Maroc:
Application de la Méthode d’Evaluation Contingente au Paysage Agricole de la Chaouia,
Rome, Italy.
Kleynhans, T.E., (2003), Environmental Roles of Agriculture in South Africa, Paper prepared
for the Roles of Agriculture International Conference, 20-22 October 2003, Rome, Italy.
López, R. and G. Anríquez, (2003), Environmental Externalities of Agriculture: Chile 1980-
2000, Paper prepared for the Roles of Agriculture International Conference, 20-22 October
2003, Rome, Italy.

17
O´Ryan, R., M. Díaz and C. Pincheira, (2003), Perceptions of the Environmental Role of
Chilean Agriculture, Paper prepared for the Roles of Agriculture International Conference,
20-22 October 2003, Rome, Italy.
Landry Craig E. and Johan A. Mistiaen, (2002), Non-market Valuation of the Environmental
Roles of Agriculture in Developing Countries, Rome: FAO.
Lopez, R. (2002), A Note on the Environmental Effects of Agricultural Expansion, Rome:
FAO.
McConnell, Kenneth E., (2002), Issues in Valuing Agricultural Externalities, Rome: FAO.
Catalina, A.H. and M. Lizardo, (2003), Case Study of Agriculture’s Environmental
Externalities Valuation: Agro-Tourism in the Dominican Republic, Paper prepared for the
Roles of Agriculture International Conference, 20-22 October 2003, Rome, Italy.
López, R. and G. Anríquez, (2003), Environmental Externalities of Agriculture: Chile 1980-
2000, Paper prepared for the Roles of Agriculture International Conference, 20-22 October
2003, Rome, Italy.
N’Diaye, K., A. Kouriba, L. Diarra, O. Kergna and Hugo Verkuijl, (2003), The Hidden
Benefits of the Office du Niger Irrigation Scheme, Paper prepared for the Roles of Agriculture
O´Ryan, R., M. Díaz and C. Pincheira, (2003), Perceptions of the Environmental Role of
Chilean Agriculture, Paper prepared for the Roles of Agriculture International Conference,
Pandey, V., (2003), Environmental Impact of Improved Technology-Farm Level Survey and
Farmers’ Perception, Paper prepared for the Roles of Agriculture International Conference,
Seini, A.W., G. Botchie and L. Damnyag, (2003), Analysis of the Environmental Services
Provided by Selected Farming Systems in Ghana, Paper prepared for the Roles of Agriculture
Yao, L. and G. Dongmei, (2003), Evaluation of Environmental Roles in Physical Dimension
and Economic Value: Case Study of Farming System in Middle and Lower Reaches of
Yangtze River, Paper prepared for the Roles of Agriculture International Conference, 20-22
October 2003, Rome, Italy.

Table 1: Summary Table of ROA Environmental Site Studies
Country Authors Positive Externality Reduction in Negative
Externality
Methodology
Chile Ramón López,
Gustavo Anríquez
Soil protection and GHGs Water Pollution Econometric
Chile Raúl O´Ryan,
Manuel Díaz
Expert Perceptions Perceptions Delphi
China Yao Lu,
Dongmei Guo
GHGs Water Pollution Contingent Valuation
Dominican Republic Alejandro Herrera Catalino
Magdalena Lizardo
Agro-tourism Contingent Valuation
Ethiopia Eyasu Elias Genetic diversity Market Value
Ethiopia Eyasu Elias Soil erosion and siltation Market Value
Ghana A. Wayo Seini ,
George Botchie,
Lawrence Damnyag
Benefits of Agro-forestry Contingent Valuation and
Replacement Cost
India Vijaylaxmi Pandey Soil erosion, water
savings and GHGs
Market Values
Indonesia Fahmuddin Agus
Made Oka A. Manikmas
Rural amenities
Agriculture production vs
environmental services
Less damaging
agricultural practices
Travel Cost, Contingent
Valuation and Replacement
Cost
Mali K. N’Diaye, A. Kouriba,
L. Diarra, O. Kergna,
Hugo Verkuijl
Irrigation infrastructure Economic Assessment
Mexico María Eugenia Ibarrarán,
Enrique Guillomen, José
Iván Rodríguez
Organic Coffee Economic Assessment
Morocco Allali Khalil Rural Amenities Contingent Valuation
Morocco Allali Khalil Agro-tourism Hedonic
South Africa T.E. Kleynhans Land, soil, water and
chemical use
Economic Assessment

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