Agriculture Reference
In-Depth Information
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We Pay the External Costs
An
economics textbook provides a useful definition. When price fails to
re
gister all the costs associated with the production of a good (so costs are
ex
ternal to the market and “accrue to parties other than the immediate
bu
yer and seller”), these are called external costs (McConnell 1984, 71).
N
egative externalities are the real production costs that are foisted off on
so
ciety. In agriculture, externalities have these characteristics: these costs
ar
e neglected, there is a time lag, damage often occurs to groups with no
vo
ice, the identity of the producer is not known, and the economic and
po
licy solutions are poor (Pretty et al. 2000, 114). There are many examples
of
agricultural externalities: for example, farmers spray pesticides that con-
ta
minate groundwater, streams, and rivers that flow to the ocean and cause
eu
trophication (a dead zone) at the river's mouth. Massive agricultural use
of
fossil fuels (both directly in tractors and indirectly in petroleum-based
ag
richemicals) increases air pollution and produces greenhouse gases that
ex
acerbate human-induced global climate change. Likewise, clearing land
fo
r agricultural cropping means either tearing down trees or draining wet-
la
nds, both of which decrease habitats for wildlife and affect air or water
qu
ality. In addition, thousands of people become ill from Salmonella and
ot
her bacteria in our food due to the industrial production techniques. But
th
e farmer doesn't pay for these things, and agribusinesses certainly don't,
an
d we consumers don't pay for it in monetary terms, since food prices
re
main low. So who pays?
First, we have to ask: what are the real costs? Pretty et al. (2000)provide
an
excellent overview of the total negative external costs of agriculture in the
U
K,which they estimate to be $3.7 billion for 1996. This figure is based on the
co
sts of contamination of drinking water (from pesticide, fertilizer/nitrate,
ph
osphorus, eroded soil, and bacteria from livestock manure), damage to
w
ildlife and habitats, emissions of gases, soil erosion and loss of carbon,
an
d food poisoning. And the authors readily admit that their study includes
on
ly those externalities with monetary value, so numerous other goods
an
d values are excluded. (How much is a viable rural community worth?)
Research conducted more than a decade ago already indicated that the
indirect costs of pesticide use in the United States, including ecological
degradation and human illness, were between $1 and $2 billion annually
(Pimentel 1991). We can only imagine how high this figure is today.
A more abstract idea, put forth by ecological economists, seeks to de-
scribe the value to be placed on what the environment does for humans.
Personally, I find it a bit disturbing that we have to put a monetary value on
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