Agriculture as a Solution: Ecological Goods and Services

Agricultural producers own and manage the majority of Canada's natural capital in southern Canada. In addition to the goods and services we're all familiar with (wheat, canola, and beef, for example), this capital is also used to produce ecological goods and services. Ecological goods and services (EGS) are the benefits that society receives from healthy landscapes and the conservation of natural lands, including wetlands. These benefits include biodiversity, carbon sequestration, groundwater recharge, flood and erosion control and the purification of air and water. Agricultural producers have the ability to manage their lands to provide an increased abundance and diversity of EGS.

With this definition in mind, there are several inferences that can be made about the provision of EGS. First, if society demands these types of services and realizes where these benefits come from they will more likely be willing to pay for them, especially if supply is short and at risk of going away. In this way, EGS is similar to other commodities that society demands and farmers supply. Second, if EGS, or a portion of EGS, are assumed to be public goods, then existing government policies and programs should be enhanced to provide mechanisms for investment in the natural capital that private individuals manage. Tools that could be considered include incentive payments, which could be made through third parties that the public supports, market-based incentives such as carbon credits, or government programs like the National Farm Stewardship Program. Where payments are used there should be longer-term commitments (say 10 years or greater) to ensure stability both for the suppliers of the goods and services as well as those who require them.

The term EGS is not necessarily mainstream within the agriculture industry but there are a number of programs that encourage and reward the production of EGS that are easily recognizable. Organizations like Ducks Unlimited Canada have been delivering EGS programs for years by taking funds from supporters interested in waterfowl habitat and providing that money to agricultural producers through conservation easements and incentive programs that provide waterfowl habitat and a number of other benefits. Another example is Agriculture and Agri-Food Canada's Greencover Canada, program which uses funds from Canadian taxpayers to encourage farmers to convert marginally-productive cropland to permanent plant cover (e.g. forage crops or native plant restorations). In addition to providing forage this practice increases carbon sequestration and provides wildlife habitat.

So, if there is an increased interest in the EGS that farmers produce, what might this mean for an individual farmer? At Canada's first EGS Symposium held in Winnipeg in February 2006 several international speakers, representing countries that have implemented successful EGS programming, stressed that environmental programs should be kept separate from income support programs. While developing markets for EGS can certainly help a farmer's bottom line, the main objective needs to be an improvement in the ability of the ecosystem to produce the good or service of interest. There is unlikely to be any 'silver bullet' program. Different goods and services result from different land management practices. All programs need to balance the preferences of both the suppliers (the farmer) and the consumers (the public) of EGS. Instruments then need to be developed to link those willing to pay with those willing to provide. Given the non-market nature of EGS, a process for price discovery is key, but has been a missing link in much of the work to date in Canada.

So how can we determine a fair price for these non-market goods? Could various auction schemes, such as the Bush Tender auction being tried in Australia, be applied in Canada. This type of market-based instrument can be used to increase the supply of a good or service by creating a market for it - and then linking consumers and producers. Or do better options include investment of public funds in farmer's operations through programs such as AAFC's new Growing Forward initiatives or tax credit programs?

DUC has been focused on increasing the underlying science of EGS. To answer the question What land management practices provide which good or service?, we've worked with universities and government partners to research the role of wetlands in water quality, carbon sequestration, and waterfowl use. This research will help support EGS program development.

Canada has the opportunity to learn from others who have developed EGS programs around the world, including Europe, Australia and the US. Is Canada ready to advance contemporary policies and programs, such as market-based instruments and tax incentives, to provide more stability to the industry while improving overall sustainability - economically, environmentally, and socially? 

Cynthia Edwards is the National Manager of Industry and Government Relations with Ducks Unlimited Canada.

Further Reading

Olewiler, N. 2004.The Value of Natural Capital in Settled Areas of Canada. Published by Ducks Unlimited Canada and the Nature Conservancy of Canada. 36pp.

Ducks Unlimited Canada Ecological Goods and Services fact sheet series:

1. Natural Values: Linking the Environment to the Economy is to improve the environmental and economic understanding of natural systems.
2. A Strategy for Conserving Canada's Natural Capital highlights DUC's recommendations for ecological goods and services programs and policies in Canada.

This blog entry was authored by Cynthia Edwards. To read additional Illative Blog entries or to leave comments on this entry, please visit www.illativeblog.ca. The Illative Blog is an initiative by the Knowledge Impact in Society (KIS) Project based out of the University of Saskatchewan. Email correspondence can be sent to kis.project@usask.ca