AGRICULTURE, ECONOMICS AND

NATURE
WEEK 2
RESOURCE AND ENVIRONMENTAL CHALLENGES FACING AGRICULTURE

SEGMENT 1
WATER POLLUTION
 Some key challenges
• Water pollution
• Pesticide bans
• Salinity
• Phosphorus availability
• Water shortages
• Herbicide resistance
• Climate change
 Water pollution arising from agriculture

• Sediment
• Nutrients
• Pathogens
• Pesticides
• Can occur in groundwater and surface water
(eutrophication&hypoxia 2008) (CC BY)
 Nutrients
• Some nutrients from fertiliser run off into
waterways or leach into groundwater
• Can affect:
– The ecosystem
– Human health
 Affected Water Bodies
• Chesapeake Bay, USA
• Gulf of Mexico (hypoxic zone), USA
• Great Barrier Reef, Australia
• Gippsland Lakes, Australia
• Many rivers, lakes and inshore marine waters
around the world
Sedimentation

(CSIRO Science Image) (CC BY)

 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
(NASA 2010) (CC BY)
(CSIRO Science Image) (CC BY)
“The Reef continues to be exposed to increased levels
of sediments, nutrients and pesticides. In particular,
there are significant effects in inshore areas close to
developed coasts, such as mangrove die-back and
increased algae on coral reefs.”

Great Barrier Reef Marine Park Authority

http://www.gbrmpa.gov.au/managing-the-reef/threats-to-the-reef/declining-water-quality
 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