Conservation agriculture and the role of policy
The preceding analysis of the financial and other factors associated with the adoption of CA and related practices has already captured many of the effects of policy, or more generally government action, on adoption. Governments use macro-economic policy, trade regulations, input subsidies, or education and extension to alter the decision-making environment in which farmers choose one practice over another (Figure 3). This chapter examines the actual and potential roles of policy in the adoption of CA.
Agriculture has been subject to considerable state interest and intervention over the past half-century, perhaps more than any other economic sector (Robinson, 1989; Gardner, 1990). While it is possible to overestimate the influence of policies in farmer decision making (Winter, 2000), there is increasing recognition that the provision of public support in the form of guaranteed output prices, input subsidies, deficiency payments, cheap credit, or disaster relief has encouraged and facilitated massive investment by farmers in production capacity expansion. Some authors have characterized the resulting dominant form of agriculture, at least in the developed world, as industrial. This is because of its continuing trend towards larger and fewer units of production, regional and enterprise specialization, more intensive soil tillage, increased reliance on agrochemicals, and in many locations, surplus output (Troughton, 1985). Given its associated effects upon the quality of soil, water and wildlife habitat, various authors have implicated agriculture policy as a contributing cause of environmental degradation (Libby, 1985; Pierce, 1993; OECD, 1989; Lewandrowski et al., 1997).
It is in this context that many governments have introduced a variety of programmes to encourage the adoption of CA-type practices. With extension services, subsidies and taxes, these initiatives have achieved some important results. For example, the success in promoting CA practices in certain developing regions, particularly Latin America, is noteworthy, and policy has played an important role. Box 4 discusses the key factors cited in the expansion of CA in the Mercosur countries of Latin America. Many of these stem not from government policy but from extraneous factors and local traditions. Indeed, many programmes promoting CA throughout the world have been relatively ineffective because of contradictory signals and incentives from existing subsidy programmes. For example, policies designed to promote sustainable agriculture can be undermined by other, typically richer, policy measures in support of highly erosive row crops such as groundnuts and tobacco, or by weak or slow-to-respond research and extension efforts.
Some studies have shown government-financed extension to have a positive impact on adoption (e.g. Logan, 1990), although Agbamu (1995) cautions that not all forms of extension will achieve such an end. In the case of state financial assistance, Napier and Camboni (1993) identify a positive, albeit weak, correlation between participation in such programmes and conservation tillage adoption. More specifically, based on a model cash crop farm in southwest Ontario, Stonehouse and Bohl (1993) show that a one-time subsidy covering 20 percent of the outlay costs would induce a farmer to convert from conventional tillage to no-till. However, the study suggests that conversion to permanent cover crops such as alfalfa would require excessively high subsidies. Finally, with respect to the use of taxes, Aw-Hassan and Stoecker (1994) determined that if the off-site damages from conventional practices were taxed as high as US$2.25 per tonne of soil loss, the area of high-yielding/high-erosion land under conservation tillage would increase significantly, while lower-yielding land would be converted to pasture. However, in a similar study, Stonehouse and Bohl (1993) show that meaningful levels of soil erosion prevention via taxation are difficult to achieve and result in significant reductions in net returns.
Beyond the confines of conservation tillage, reviews of new conservation schemes in Europe can provide some insight into the effect of policy on conservation behaviour among farmers. These schemes have developed through a gradual conversion of the European Union's extensive subsidy regime from supporting production to supporting environmental practices such as set-aside (Potter and Goodwin, 1998). Based on surveying in Scotland, Wynn et al. (2001) show that compensation alone does not ensure conservation programme success as a lack of awareness of such programmes can limit participation. Once aware, farmers were more likely to participate, as long as there was a good fit with the farm situation and the costs of compliance were low. Compliance costs are often an obstacle to adoption (Wilson, 2000). Even with full compensation for foregone agricultural income resulting from participation, administrative or transaction costs equal to just 5 percent of total compensation can inhibit farmer participation (Falconer, 2000). This evidence from Europe suggests that financial support alone is not sufficient to encourage the adoption of CA-type practices. It is necessary to combine such support with other efforts directed at the specific needs of farm operations.
Several studies have examined the reasons for successful promotion of CA (zero tillage) in the Mercosur region of South America, arguing that an efficient innovation system developed around the promotion of zero tillage. This system included a number of policy elements along with extraneous elements that contributed to its success. As an example of the latter, agrochemical companies helped initiate the programmes recognizing their own self-interest in promoting zero tillage. Farmers benefited significantly as well, as the benefits from zero tillage were especially pronounced for the key soybean crop and were available to mid- and larger-sized farms. In terms of government's policy role, traditional research and extension services were weak and slow in responding to the perceived needs of farmers. However, this opened the way for others such as pioneer farms, NGOs and foreign aid agencies to fill the gap. In addition, farmers could readily recognize and understand the underlying problem and experiment with solutions, aided with information supplied by associations of zero-tillage farmers. Local traditions also helped: although there was no precursor knowledge of zero tillage, there was a tradition of innovating with commercial crops. Moreover, a mismatch between extension and research targeting of small and medium-sized farms in some countries (e.g. Paraguay) may have limited an otherwise successful CA programme. In New Zealand, the government removed virtually all support, including environmental grants, to the dominant pastoral agriculture sector in the post-1984 period. This action provides a unique opportunity to assess the implications of subsidy removal for farm-level resource use and environmental stewardship. The evidence suggests that the response to subsidy removal, at least in the short term, is a decrease in farming intensity as manifested in: (1) reduced use of marginal lands; (2) decreased and more selective fertilizer use; and (3) reduced livestock numbers and stocking rates. At the same time, increased insecurity among farmers has shortened planning horizons and stifled certain environmental investments. While farmers still undertake practices such as planting trees for erosion control because of a recognized need or a conservation ethic, the termination of grants and other subsidies has generally reduced the propensity and ability of farmers to undertake many stewardship activities, especially during periods of financial distress. Therefore, many regional governments have filled the void left by the removal of national support by funding new programmes to encourage farm-level stewardship.
Sources: Bradshaw and Smit, 1997; Bradshaw et al., 1998; Blunden and Bradshaw, 1999; Sorrenson, 1997.
Given the perceived environmental impacts over the past half-century, some have argued that the decoupling of agricultural support from production decisions would represent the most effective means by which governments could alleviate environmental degradation (OECD, 1989 and 1998). There is debate concerning the means, both direct and indirect, by which governments can promote conservation in agriculture effectively. Table 9 summarizes the many approaches adopted by governments in the developed world to achieve various conservation objectives.
In promoting CA, a key concern for policy-makers is whether CA provides a positive or negative net return to potential adopters. Once this uncertainty is rectified, Uri (1998b) recommends:
With respect to the first approach, McNairn and Mitchell (1992) argue that encouraging the adoption of conservation practices requires assurance of long-term benefits from adoption; unambiguous, easily understood and accurate information; and the promotion of multiple economic and non-economic benefits. Education plays a key role in motivating adoption and requires tailored, credible, and appropriate information and experience that is communicated through the proper channels. Extension services to provide information and assistance can be highly effective, especially in the case of new or emerging technologies, although public agents need not be the exclusive providers of such services.
Financial assistance for the adoption of various conservation practices is well established in Europe and, to a lesser degree, North America. Assistance can take a variety of forms, such as tax credits on equipment, machine rentals, cost-sharing programmes and direct subsidies. Assistance is most suitable to help overcome significant initial investments and transition costs, and in cases where adoption is unprofitable from the individual farm perspective. Box 5 presents an analysis of policy options for encouraging soil conservation on farms in Ontario, Canada, highlighting the role such analyses can play when government assistance is needed. However, Nowak (1987) suggests that financial assistance may also be important where the adoption of a technology results in positive net returns for farmers. The author argues that institutional support tends to reduce the risk faced by farmers in adopting an `unknown technology' and thereby reduces their need for detailed information prior to adoption. That is, to overcome non-adoption because of onerous information demands, state support is useful.
A less interventionist policy approach might focus on research and development to enhance the benefits of CA adoption by improving performance or reducing costs. This approach relies on voluntary adoption and aims to increase the odds of this occurring by making the practice more attractive. However, research and development is a long-term policy strategy with an uncertain probability of success.
Land retirement is only suitable in instances where soil erosion concerns are so significant as to warrant conversion to permanent cover crops. Typically, this approach requires significant public financing to compensate farmers, and it is infeasible in areas highly dependent on a limited land base for the production of foodstuffs.
Finally, although tried in some locations, regulating soil erosion limits is not a common approach (Libby, 1985). This situation probably arises from political awkwardness and onerous enforcement/compliance demands. This is especially so where meeting a soil loss regulation through use of no-till results in significant declines in net returns (Box 5). A more common regulatory approach involves cross-compliance measures whereby eligibility for a support programme depends on the adoption of certain conservation practices. Because compliance is by choice, programme implementation is liable to be more politically feasible and economically efficient. With respect to the use of taxes on soil erosion, it is possible to induce CA adoption and even pasture conversion. However, meaningful levels of soil conservation involve significant revenue losses (Box 5). Hence, although possible, taxation is politically infeasible.
One study examined the impacts of public policies on farmland use, soil conservation, farm-level economics and the public budget to assess the effectiveness of the policy alternatives for combating soil erosion. The objective was to estimate the anticipated effectiveness of government actions designed to regulate soil erosion losses. The study used a multi-period linear programming model to model a typical cash-crop farm operation producing soybeans, maize and cereal grains in southwest Ontario. The goal was to maximize the NPV of farm net returns over a 20-year period. It considered ten production system alternatives, representing various crop sequences and soil tillage techniques (conventional tillage, conservation tillage and zero tillage). In addition, six policies were modelled: (i) a regulated limit on soil loss from farm operations per year; (ii) a tax on soil erosion losses per year; (iii) a tax on material inputs associated with conventional tillage systems; (iv) a one-time subsidy for conservation tillage equipment purchases; (v) an annual subsidy to encourage the incorporation of alfalfa into production or to adopt conservation tillage; and (vi) a direct subsidy on production prices for alfalfa. In the absence of any public policies, the most profitable system is the maize-soybean-winter-wheat sequence with conventional tillage. Other policies showed the following:
In conclusion, public policy measures that require the farmer to bear the burden of reducing soil erosion are unlikely to be implemented because of the adverse financial effects imposed on farm operations. Public policies that require taxpayers to bear the burden would be effective in terms of cost per unit of controlled erosion, but could become a fiscal problem, especially during an era of government budget deficits and rising debt.
Source: Stonehouse and Bohl, 1993.
The inconclusive nature of empirical studies, and obvious site-specific nature of many results, suggests that a universal approach is not possible. In order to accommodate differences between farms, farmers and economic circumstances, a targeted policy approach may be preferable. In other words, policy mechanisms such as grants or extension services could be geared to the particulars of a location or, preferably, to individual farmers and their farm operations (Box 6). While a targeted policy approach places a heavy administrative burden on policy-makers, it could achieve greater efficiencies than a more uniform approach, and may represent the most effective means of encouraging CA adoption.
Although a targeted policy approach may be most appropriate for the design of programmes directly promoting CA, there are some alternative policy prescriptions that may be more universally applicable. For example, Isham (1999) points out that parallel investments in social capital may be necessary to create a sufficiently enabling environment for the adoption of desirable project activities, and this may apply strongly in the case of CA. Some authors argue that social capital is a product of a learning process. Fostering discussions about the community and seeking consensus decision making can help achieve such learning. A key question is whether governments can foster social capital, as top-down efforts may not be able to promote bottom-up social capital. However, Sobels et al., (2001) suggest this is not so, citing Landcare in Australia as an example of successful government support contributing to social capital. Indeed, to a certain degree, the success of Ontario's Environmental Farm Plan programme is ascribable to farmer pride and interest in `doing the right thing' (Box 6). Both pride and peer pressure may be important forms of motivation for CA adoption, and government policies may be able to contribute on this front.
Ontario's Environmental Farm Plan (EFP) Programme represents an innovative approach to environmental conservation on the farm through the voluntary participation of farmers to assess environmental risks and raise environmental awareness on their farms. The EFP Programme began in 1992, helping farmers develop a practical plan for operating their farms in a way that is environmentally responsible. Individual farmers work through a series of 23 modules covering such issues as water quality and wildlife habitat, and submit their individualized plans for peer review (i.e. to fellow farmers). It began and remains a farmer-driven process, although government provides some technical expertise and funds. Compliance and interest among farmers is high, especially relative to traditional government-led regulatory approaches. While some funding is available (a maximum C$1 500 per farm for those farmers who complete, implement, and secure approval of their participation in the EFP, plus winners of environmental contests receive C$1 000), the programme primarily draws on farmers' pride and their desire to garner respect with colleagues, neighbours and consumers. As one programme participant stated: "The EFP is an excellent way to mark our own report card and rate all our farm activities environmentally....We need to inform our urban neighbours that we are concerned about the environment".
Sources: Grudens-Schuck, 2000; Klupfel, 2000; Stonehouse, 2000; Ontario Soil and Crop Improvement Association, 2001.
Specialized policy and economic analyses are prerequisites for the appropriate design and correct targeting of CA policies. Policy analysts and economists interested in CA can make use of numerous new techniques and ways of thinking. Sustainability indicators are one example. These capture changes in farming practices that alter the sustainability of the farming system in some quantifiable way that conventional analysis may fail to capture. Therefore, sustainability indicators help describe the evolution of soil productivity over time or present its status in terms that better contrast conditions under CA and conventional management. Sustainability indicators are applicable at the local farming-systems level, at intermediate levels such as the community or region, or at higher levels. Table 10 shows some of the component indicators that changes in tillage practices affect at each of these levels. To the extent that more comprehensive sustainability measures incorporate these indicators, changes in farming practices will cause changes in the accompanying measures.
At the village and farm level, sustainability indicators assess the sustainability of specific farming systems and, by inference, the sustainability of soil tillage within a given farming system (Tisdell, 1996). Table 10 suggests several variables at the farm level that could serve as such indicators. Indicators that are more comprehensive define sustainability in an operational sense, using concepts such as sustainable income. This is the potential income that can be derived from resource use in perpetuity. In some cases, the indicators that accompany these definitions link farm-level soil degradation with national accounting techniques.
At the macroeconomic level, the system of national accounts has integrated soil degradation through formal green accounting initiatives such as the United Nations System of Integrated Environmental and Economic Accounting. In keeping with standard national accounting practice, green accounting measures disinvestment or investment in soil natural capital and then adjusts NNP/GNP accordingly. Other national indicator approaches include the World Bank's calculations of genuine savings rates. These adjust net domestic savings for changes in the value of resource stocks and pollution damages while the Pearce-Atkinson indicator incorporates elements of the genuine savings idea. Indicators such as this can convey the message powerfully to decision-makers that soil degradation is resulting in a loss in national wealth, and so encourage greater efforts to promote more sustainable practices such as CA.
Analysts who have to assess the attractiveness of projects involving CA or competing farming practices can adopt a number of measures. Such efforts are important because some of the benefits of adopting CA do not show up in conventional cost-benefit type analyses, or in comparisons of CA and alternative practices in narrowly-defined financial terms.
It is common practice to use non-market valuation techniques to incorporate the benefits and costs of farming practices that are not priced in markets. Examples include downstream siltation from soil erosion, or loss of organic fertilizer where dung is used as a fuel instead of on farm fields. The valuation practices most appropriate to comparisons of CA and conventional farming practices include replacement cost, changes in productivity, direct and indirect substitute approaches, preventive or mitigative expenditures, and hypothetical or constructed market techniques (IIED, 1994).
Economic analyses at the project level can incorporate the depletion of soil as a form of natural capital under conventional tillage practices, so enabling fairer comparisons with CA. This depletion constitutes a cost of non-sustainable cropping in addition to normal production costs. It is a user cost as it yields short-term gains at the expense of future income (Daly, 1996). Omitting user costs results in an overstatement of the net economic benefits of current cropping practices that deplete soils. Several techniques are available to calculate the user cost of depleting natural resource stocks. Two common approaches are the net price method and the marginal user cost method.
Proper environmental analysis requires the assessment of changes in environmental conditions in terms of the full range of behavioural responses that occur (Freeman, 1993). When farmers adopt CA, numerous ancillary changes can be expected, such as crop switching, changes in pest control measures, shifts in cropping duties for household members (by gender), etc. For this reason, comparative analyses of CA and alternative practices should adopt a whole farm approach to capture the full range of these behavioural changes (Sorrenson, 2001). Diebel et al. (1993) argue that analysis of individual practices in isolation can even provide misleading results when certain factors combine synergistically to raise barriers to adoption that are not otherwise evident.
While project work makes universal use of cost-benefit analysis, other project evaluation techniques hold promise for the appraisal of CA projects or technologies. These include multi-criteria analysis (MCA), cost-effectiveness analysis, decision analysis, environmental impact assessment and participatory methods. MCA recognizes that government decision-makers and smallholders have many objectives in mind when deciding about agricultural project viability and on-farm management practices, respectively; more than a cost-benefit analysis alone can capture. In addition, various trade-off techniques, such as trade-off curves or more sophisticated analytical techniques, can help assess the trade-offs amongst competing objectives. For example, Van Kooten et al. (1990) use such a method to examine the trade-offs between net returns and stewardship motivations amongst farmers in Saskatchewan, Canada, in adopting soil conservation practices.