KEY CHALLENGES IN

AGRICULTURE
 Some Key Challenges
• Water pollution
• Pesticide bans
• Salinity
• Phosphorus availability
• Water shortages
• Herbicide resistance
• Climate change
Water
Pollution
 Water Pollution Arising From Agriculture

• Sediment
• Nutrients
• Pathogens
• Pesticides
• Can occur in groundwater and surface water
 Nutrients

• Some nutrients from fertiliser run off into

waterways or leach into groundwater
• Can affect:
– The ecosystem
– Human health
 Sedimentation
• Soil cultivation for crops, or grazing by livestock,
contributes to soil erosion
• Soil particles move into waterways
• Impacts:
– Pollutant accumulation (e.g. phosphorus, pesticides)
– Shallower waterways - reduced capacity
– Reduced light penetration
– Ecosystem damage
 Economic Perspectives
• Water pollution from agriculture is an
externality or an external cost
• People who could fix or prevent the problem
don’t bear the costs of the problem
• Costs of water pollution not reflected in the
costs of agricultural production
• Potentially justifies a response by government
 External cost

Price of
Grain
Demand
Private marginal cost

Pp

Quantity
Qp of Grain
 External cost

Price of Social marginal cost

Grain
Demand
Private marginal cost
Ps

Pp

Quantity
Qs Qp of Grain
 Effect of the Externality

• Marginal cost of grain not only includes farmer

inputs (fertiliser, herbicides, labour, fuel, etc.)
• Also includes reduction in environmental quality
• Social cost higher than private cost
• Means that the optimal quantity of grain
production is lower – a balance between
production and environment
 Summary
• Main pollutants from agriculture are nutrients
and sedimentation
• Water pollution is an example of an external
cost – an additional cost to the community, on
top of the farmer’s cost of production
Pesticide Bans
 Pesticide Bans
• Pesticides are highly beneficial to agriculture
• Some early pesticides were found to have
adverse environmental and health impacts
• Ongoing scrutiny of existing pesticides, and
sometimes new bans
 DDT (insecticide)
• Widely used after World War II
• Helped to prevent typhus and malaria
• Negative health and environmental impacts
identified in the 1960s
• Was banned world-wide in 2004
• Impacts continue due to persistence and
bioaccumulation
(Wolf 2008) (CC BY-ND)
 Neonicotinoids in the EU
• Kill sucking insects in various crops
• European Union banned three neonicotinoids
in 2013
• Impact on bees: “Colony Collapse Disorder”
– bees can’t find their way back to hive
• USA continues to use these pesticides
extensively
 Atrazine (herbicide)
• Very widely used herbicide
• May be an endocrine disruptor in mammals
• Found in groundwater
• Banned in EU in 2004
• Proposals to ban in USA
• Proposal turned down by EPA
• Remain controversial
 Pesticide Bans: Private Impacts

• Bans on pesticide reduce farmers’ options

• Require more expensive control methods,
or put up with yield losses
• Higher marginal cost of production
 Externality
Price of Private
Grain Demand marginal
cost 1
Private
marginal
Ps cost 0

Pp

Quantity
Qs Qp of Grain
 Pesticide Bans: Public Impacts
• Bans reduce the external costs from pesticide
usage
– Human health
– Biodiversity
– Water
• Regulatory bodies must judge whether
reductions in external costs outweigh negative
impacts on farmers
 Summary
• Some pesticides cause negative impacts on
human health or the environment
• External costs
• Pesticide bans aim to reduce these external
costs, but at a cost to agriculture
 What causes Dryland Salinity?
• Deep-rooted native perennial vegetation was
cleared
• Replaced by shallow-rooted annual crops and
pastures
• Caused water table to rise, mobilising salts in
the soil
• Crop or pasture species grow poorly in saline
soils
(Van Aken 1981) (CC BY)
 Dryland Salinity

This image is © State of Victoria, Department of Environment and Primary Industries 1980. Victorian
Resources Online www.depi.vic.gov.au/vro. Reproduced with permission.
 Managing Dryland Salinity

• Use deep-rooted plants to increase water-

use
– Perennial pastures
– Farm forestry
• Protect remnant native vegetation
• Engineering solutions (esp. drains to lower
water tables locally)
• Use salt-tolerant plant species
 Economic Perspectives: Private
• Dryland salinity is partly a private problem and
partly an externality problem
• Usually, the greatest benefits of salinity
management are on a farmer’s own land
 Economic Perspectives: Private

• Economic analysis: the costs of preventing

salinity by perennial vegetation often
outweigh the avoided costs of salinity
– e.g. convert 50% of the farm to woody perennials
to prevent loss of 10% of the farm
• Few farmers have adopted perennials on a
large enough scale
Optimal Salinity Abatement

$
MC of abatement

MB of abatement

Quantity
Q* of Salinity
Abatement
Optimal Salinity Abatement

$
MC of abatement

MB of abatement

Quantity
Q* of Salinity
Abatement
Optimal Salinity Abatement

$
MC of abatement

MB of abatement

Quantity
Q* of Salinity
Abatement
 Economic Perspectives: Public

• Including the external benefits raises the

marginal benefit curve
• How much difference made to optimal level of
abatement?
• Depends on magnitudes of external benefits
and private costs
Optimal Salinity Abatement

$ MC of abatement

MB of abatement
(private + external)

MB of abatement
(private)
Quantity
Q* of Salinity
Abatement
 Summary

• Rising water table mobilises salts

• The economics of some key salinity prevention
methods are not attractive to farmers
Phosphorus Scarcity
 Phosphorus
• A critical nutrient in agriculture – provided
in fertilisers
• Mined from rock phosphate
• Previously from Guano (bird excreta)
• Unlike nitrogen fertiliser, phosphorus
fertiliser can’t be chemically synthesised
Phosphorus deficiency in a corn crop
(Soil Science 2010) (CC BY)
 Will We Run Out Of Phosphorus?
• Peak phosphorus: when global phosphorus
production will reach its maximum rate
• After that it will decline
• There is controversy over when this will happen
• Estimates: in 20 to 300 years
 Peak Phosphorus
350,000,000
World rock phosphorus production (tonnes)

300,000,000 Projected

250,000,000

200,000,000

150,000,000 Actual

100,000,000

50,000,000

0
1900 1950 2000 2050 2100
 What Would Happen After Peak?
• More phosphorus deposits will probably be
found
• Will be more difficult and expensive to access
• Will drive up fertiliser and food prices
• “Phosphorus isn’t going to disappear; it’s
going to get really expensive”, James Elser
http://www.newswise.com/articles/secure-food-and-water-supply-depend-on-phosphorus
 Economic Impacts
• Phosphorus will become more expensive
• Production will be reduced
• Worst impacts felt by poor consumers
 Economic Impacts
• Farmers’ costs will increase, but revenue will
increase due to increased prices
Price
S2

D S1

P2
P1

Q2 Q1 Quantity

• If the demand curve is steep, most of the

impacts will be felt by consumers
 Summary
• Phosphorus is an essential and widely-used
agricultural input
• After peak phosphorus occurs
– Higher costs to consumers
– Higher costs to farmers, but also higher revenues
Water Shortage
 Agricultural Water

• 70% of water withdrawn from rivers and

groundwater globally used for agriculture
• Water demand has increased
• Other demands for water growing
• Reductions in supply likely in some areas due
to climate change
 Why Has Water Demand Increased?

• Water shortages of little concern until around 50

years ago
• Since then:
– Population growth
– Economic growth
– Competition from industry
– Competition from the urban community
– Competition from mining
– Growth in area irrigated
World Irrigated Area 1961-2011

350

300

Earth Policy Institute - www.earth-

Million hectares

250

200

150

100

50

0
1961 1971 1981 1991 2001 2011
Source: FAOSTAT
Estimated Groundwater Withdrawals

300
Cubic Kilometers per Year

250 India
United States

Earth Policy Institute - www.earth-

200 China

150

100

policy.org
50

0
1940 1950 1960 1970 1980 1990 2000 2010
Source: Shah, 2005
 Water Re-allocation: Private Impacts

• Water shortages or allocations away from

agriculture mean:
– Less irrigation (or more expensive irrigation)
– Less production
– Potentially financial costs, depending on how the
water is re-allocated
• Purchased from willing sellers
• Compulsory acquisition
Water Re-allocation: Good or Bad?
• Essentially asks: do benefits to the community
from improved environment outweigh the
cost of obtaining water
– purchase cost (if purchased in market)
– losses in farm profits (if appropriated)
 Summary
• Increasing competition for water between
irrigated agriculture and other uses
– Towns
– Environment
– Industry
• Water being re-allocated in some cases
• Reduces agricultural production
Herbicide Resistance
 Herbicide Resistance
• Occurs when a population of weeds evolves to
survive a herbicide that previously killed it
• Where highly effective herbicides are used
repeatedly, resistance is inevitable
 Some Stats
• 263 weed species have evolved resistance to
some herbicide
• Resistance to 23 of the 26 known herbicide kill
mechanisms
• Resistance to 164 different herbicides
• Resistance reported in 94 crops in 71
countries2

Source: http://www.weedscience.org/summary/home.aspx
 Glyphosate
• Most serious resistance problem
• Glyphosate is cheap, effective, widely used
• Modern farming relies on it
– zero-tillage agriculture
• Glyphosate resistance was slow to emerge
• Now growing rapidly
• Largely due to Roundup-Ready® GM crops
– soybeans, corn, alfalfa, cotton, canola, sugarbeets
 Strategies to Delay Resistance

• Rotate between different herbicide groups

• Use non-chemical methods as well
• Use full recommended rates
• Check for survivors after application
• Clean equipment between sites (reduce
spread)
Source: http://wssa.net/weed/resistance/
 Economic Perspectives
• Most cases are effectively irreversible
• Once susceptibility is used up, you can’t get it
back
• Use herbicides with discretion – get best value
from them
 Economic Perspectives
• Is it worth reducing herbicide use in the short
term to preserve the herbicide?
• Sometimes yes
– If it is possible to eradicate resistant weeds
• Often no
– Use them, but make sure they are not wasted.
 Does Resistance Cause External
Costs?
• Resistant weeds may spread from farm to
farm (a minor problem if receiving farm has a
history of heavy herbicide use)
• If loss of glyphosate causes a resumption of
tillage, may increase soil erosion
• May be replaced by more toxic chemicals
• Current policies rely on education, but that’s
unlikely to be sufficient
 Summary
• High selection pressure by effective
herbicides, leads to evolution of resistance
• Can reduce farmers’ profits substantially
• In many cases, managing resistance is like
mining an exhaustible resource
• Resistance can cause external costs
Climate Change
(Machen 2013) (CC BY-ND)
 Global CO₂ Emissions from Fossil Fuel Burning
by Fuel Type, 1900-2011

4,500
4,000 Coal

Earth Policy Institute - www.earthpolicy.org

Million Tons of Carbon

3,500
3,000
Oil
2,500
2,000
1,500
1,000 Natural Gas
500
0
1900 1920 1940 1960 1980 2000
Source: Earth Policy Institute
(Coppi 1991) (CC BY)
Global Net Carbon Emissions from Land Use Change,
1850-2005
1,800
1,600

Earth Policy Institute - www.earth-policy.org

Million Tons of Carbon

1,400
1,200
1,000
800
600
400
200
0
1850 1870 1890 1910 1930 1950 1970 1990
Source: Houghton
 Climate Change and Agriculture
• Projections: changes in temperature, rainfall,
rainfall distribution and frequency of extreme
weather events
• In some regions, negative impacts on
agriculture (e.g. south-west Western Australia)
• In other regions, positive impacts on
agriculture (e.g. Canada, UK?)
(McCaffrey 2013) (CC BY)
 Temperature Changes
• May enhance crop growth in some locations if
changes not excessive
• Results sensitive to timing
– high temperatures during grain filling particularly
bad
– higher spring temperatures may reduce the risk of
frost damage
(Coppi 1992) (CC BY)
 Rainfall Changes
• Predicted to increase in some areas and
decrease in others
• Predictions less confident than for
temperature
• Distribution throughout the year is also
important, but even more unpredictable
(University of Delaware 2013) (CC BY)
 Carbon Dioxide
• Rising atmospheric CO2 concentrations
beneficial to plants
• Will offset some negative impacts of
temperature and rainfall changes
• If temperature and rainfall changes are severe,
will outweigh benefits of higher CO2
(Coulstock 2006) (CC BY)
 Extreme Event Frequencies
• Droughts, floods, cyclones, heatwaves,
hailstorms, etc.
• Detrimental to agriculture
• Little capacity to predict the extent to which
they will increase
 Summary
• Climate change likely to have different effects
on agriculture in different places
• Changes in temperature, rainfall and CO2 will
occur
• Yields are sensitive to each of these
• Much uncertainty about changes, especially
for rainfall and extreme events
Climate Change Adaptations
 Climate Policy and Agriculture
• Two ways to impact agriculture
– Increase input costs due to climate policy affecting
other sectors of the economy
– Climate policy directed at agriculture
 Policy varies greatly between countries

• Australia: Carbon Farming Initiative

– Pays farmers to undertake certain practices that
reduce emissions or increase sequestration
• New Zealand: Emissions Trading Scheme
– Pastoral agriculture not included (even though it is
almost half of their emission)
• Europe: No overarching climate program for
agriculture. Various environmental programs
include carbon-related elements.
 Climate Policy and Agriculture
• Aspects could be beneficial for agriculture
– opportunity to receive payments for planting trees
or sequestering carbon in agricultural soils
 Climate Policy and Agriculture
• Aspects could be damaging for agriculture
– Higher costs of farm inputs (fertilisers and fuel)
– Price for agricultural emissions, such as methane
production by livestock
 Adaptation
• Variation in rainfall from year to year already
drives farmers to adjust annually
• In favourable weather years, mixed farmers in
Australia increase crop area, and increase
input rates
• These tactical adjustments can generate large
economic benefits
 Adaptation to Climate Change
• Climate changes will also lead to changes in
agricultural management
– Adopting new varieties of existing crops, better
adapted to new climate
– Changing input levels
– Changing types of crops grown
– Switching between livestock and crop production
– Changes in farm scale
 Adaptations at Regional or National Levels

• Movement of which crops are grown where

• Government investments in R&D to develop
improved crop varieties
– Drought tolerant
– Able to respond to higher CO2
• New dams, irrigation infrastructure
 Food Challenge
• Adaptations will occur in context of increasing
and shifting demand for food
– Increasing population
– Increasing incomes
• Will require a investment by governments and
private sector in appropriate R&D and
infrastructure
 Summary
• Climate change policy is affecting or likely will
affect agriculture
• Could be positive or negative
• Substantial climate change would cause major
adaptations to agriculture
• Interaction with long-term food challenge