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The Influence of Biodiversity Provision on the Cost Structure of Swedish Dairy Farming
Author(s) -
Gullstrand Joakim,
Blander Rembert,
Waldo Staffan
Publication year - 2014
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/1477-9552.12028
Subject(s) - biodiversity , hectare , agriculture , business , natural resource economics , marginal cost , production (economics) , externality , function (biology) , agricultural economics , economics , agricultural science , environmental resource management , geography , environmental science , ecology , microeconomics , archaeology , evolutionary biology , biology
Multi‐functionality and the provision of eco‐system services are politically highly prioritised aspects of farming. This study uses a Symmetric Generalised McFadden cost function to analyze the relationship between costs of production and the provision of biodiversity for Swedish milk farms. Biodiversity indicators are based on the number of valuable plant species present at the farm and are modeled as an output in the cost function. The results show that the marginal cost of biodiversity increases with higher provision, and that an increased provision of biodiversity also increases the costs of market commodities such as milk and beef. The upward slope of the marginal cost of biodiversity and its competitive relationship with market goods questions the efficiency of support schemes based on voluntary programmes with a flat‐rate per hectare compensation. Instead, the results support targeted environmental policy schemes with zonings and/or the use of biodiversity indicators.