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Agriculture, pesticides and the ecosystem
Author(s) -
Pethig Rüdiger
Publication year - 2004
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/j.1574-0862.2004.tb00219.x
Subject(s) - ecosystem , economics , agriculture , externality , subsidy , ecosystem services , natural resource economics , ecology , microeconomics , biology , market economy
Economists have a good understanding of intra‐economic interdependence and a mature methodology of modelling it. Ecologists focus on the complex and sensitive interactions of species in ecosystems. This paper's objective is to suggest a new micro‐foundation of ecosystem analysis based on economic methodology, to integrate the analyses of the ecosystem and the economy and focus on the interface of ecosystem‐economy relations. Agriculture forms a major part of this interface. The basic assumption is that in the short run the individual organisms of all species behave as if they optimise their costly offensive and defensive activities given other organisms' activities (Nash‐behaviour). We consider an ecosystem with three species in a unidirectional food chain: buzzards feed on mice, mice feed on grain, and grain feeds on solar energy. A fourth species, humans, also feeds on grain. Humans intervene in the ecosystem in various ways. They can grow grain by using seed, farm labour, pesticides and possibly nature conservation measures to maintain buzzard habitat. Short‐run ecosystem equilibrium is characterised, and it is shown, in particular, how this equilibrium depends on farming activities. We then link this ecosystem model to a simple model of an agricultural economy. Both systems are solved for equilibrium simultaneously. From an economic perspective the ecosystem induces positive and negative externalities in agricultural production and in consumer ‘green’ preferences. The inefficiencies of the competitive economy are identified and some possibilities to restore efficiency through corrective taxes or subsidies are briefly discussed. We also outline how short‐run equilibria are connected through ecosystem stock‐flow relationships. Due to the complexity of the inter‐temporal analysis, the resulting ecosystem dynamics cannot be characterised in general analytical terms. It is a topic for future research to study the dynamics in numerical analysis to understand under which conditions the joint ecological and economic system is driven toward a (sustainable) steady state.