Agriculture's contribution to environmentally and culturally related
non-trade concerns
International Conference on Non-Trade Concerns in Agriculture
Ullensvang, Norway, 2-4 July 2000

Discussion Paper Four

Presented by the European Commission

Table of contents

SUMMARY	iv
1.	INTRODUCTION	1
2.	FARMING LEGACY	1
3.	ENVIRONMENTAL AND CULTURAL OUTPUTS OF FARMING	3
3.1.	Biological diversity	3
3.2.	Farmed landscape	4
3.3.	Historical features	4
3.4.	Natural disasters	5
3.5.	Joint products	5
4.	PRESSURES ON FARMING PUTTING AT RISK NON-TRADE CONCERNS	6
5.	CONCLUSIONS	7

SUMMARY
1.	In order to assure the provision of environmental and cultural benefits from farming, countries may need to implement specific and targeted policies designed to persuade farmers to deliver these public services.
2.	Farming and conservation of the natural environment are processes which, through evolution, are inextricably linked. Agriculture is the primary land use in most of the world and landscapes and biological diversity evolved with the growth of farming. 
3.	Today's agricultural systems can promote environmental value by maintaining valued landscapes, conserving biodiversity and protecting historical features. Farming also has a role to play in protecting people from the effects of certain natural disasters. The provision of these environmental services is unlikely to be assured by market forces alone. 
4.	Pressures on farming, derived mainly from technological developments and liberalisation of markets, cause farmers to modify their farm practices to maintain and advance their businesses. Common trends include intensification, specialisation and concentration in profitable areas and marginalisation and even abandonment in difficult areas. These trends are likely to lead to a reduction in the provision of environmental and cultural public goods.
5.	A range of policy instruments should be considered, including encouragement for farmers to adopt practices going beyond normal practice, to secure the supply of the public goods. WTO rules should contain enough flexibility to allow countries to provide for such policies, which should be no more than minimally trade distorting.

1.	
1.	INTRODUCTION
6.	The non-trade concerns considered in this paper are:
–	Conservation of biological diversity, meaning the numbers of species and individuals of flora and fauna;
–	Maintenance of farmed landscapes, including cultivated and semi-natural habitats and landscape features, such as terracing;
–	Preservation of cultural features, including historical remains on farmland and land uses of cultural significance;
–	Protection against disasters, whether natural or induced (or exacerbated) by human intervention, such as flooding, fire, avalanche, and severe erosion caused by wind or water.
7.	The significance of these non-trade concerns depends on the values placed on them by society. Such values reflect to a certain degree clear and generally accepted thresholds. They can, however, also be a function of history and culture. Thus, one society may value highly the continued existence of a species of wild plant which appears insignificant to outsiders; another society may place emphasis on cultural features which, again, are not valued to the same extent by other societies. For all non-trade concerns, care is needed to identify legitimate objectives which may be pursued and avoid abuse of the concept.
8.	Whether the farming sector in a given country or region satisfies the non-trade concerns of its society will depend on a number of variables, such as the state of technological development, farm structures, availability of capital and other factors of production (chiefly land and labour), market signals and competitive environment, and messages resulting from governmental policy. In the case of public goods, such as environmental benefits, technology and market messages are unlikely to provide the necessary targeted support to deliver the desired outcome, which places an increased burden on policy measures. 

2.	FARMING LEGACY
9.	Only a minority of rural landscapes in the world are not, in some significant way, the result of the formative influence of agriculture—and those that are not are largely uninhabited. The rise of agriculture enabled and fed the development of civilisations, and in so doing it became the dominant land use. Throughout the world, especially but not exclusively in Africa, Asia and Europe, modern landscapes bear the form and composition of a farming heritage. This legacy is manifest in diverse ways, such as the pattern and size of fields, extent and type of grasslands, existence of landscape features, use of terracing, cropping rotations, and settlement patterns. Agrarian societies have also bequeathed cultural features which, where they remain, continue to form an integral part of the farmed landscape.
10.	The ecological stability of rural areas is also shaped by the farming past, which has influenced the evolution of diverse species of wild flora and fauna. Indeed, the significance of farming as a positive force for the development of biological diversity has been understood only comparatively recently. In Europe, the conventional view was that the dominant process over past millennia had been the progressive clearance of an unbroken forest stretching from the Mediterranean to the tundra. Accompanying this progression, was a supposed decline in biological diversity expressed as numbers of species and individuals of plants and animals. However, this view must be challenged since a high proportion of Europe’s fauna and flora are adapted to open landscapes and could not have evolved or survived in unbroken forest. Thus, the landscape must always have been richly varied, including a mosaic of woodland, wetland and extensive tracts of open country in which agriculture naturally developed. 
11.	One commentator has described this as a process “in which Man is part of the ecosystem not, as is commonly perceived, set aside as some predatory witness awaiting opportunities to exploit it …. he has both developed with the ecosystem and influenced its development, in the same way as have climatic change, the grazing and browsing of wild herbivores, lightning strikes, extremes of drought and flood and other factors which have also driven ecological change and circumscribed biological diversity.” This relationship between the rural environment and the farming systems which have fashioned it, is common to rural areas throughout the world and particularly evident where farming has a substantial history. 
12.	However, the agricultural processes by which the farmed landscape and biological diversity evolved should not be seen as a deliberate or conscious attempt to create cultural values for later societies. The impact on the environment has been the largely unintended consequence of efforts by farmers to overcome technological challenges limiting their productive capacity, in particular in relation to use of water and nutrients. 
13.	The need to control the supply of water, has been pivotal in the development of agriculture throughout the world. In highlands of Asia, extensive terracing systems were developed by farmers in fertile mountainous regions to collect and control the release of water as well as to prevent the potentially disastrous effects of soil erosion from heavy rains on cultivated hillsides. A subsidiary effect of terracing was to protect lands further downstream from flooding which would otherwise be caused by excessively high peak discharge levels of water runoff. In low-lying areas, flood plains used and maintained by farmers are a common feature of landscapes intended to deal with, and profit from, periodic flooding. More generally, the availability of water, as well as other needs and capabilities of farming, have dictated settlement patterns and landscape features across the continents. 
14.	The need to increase nutrient input—the same demand which has in more recent years led to problems of pollution of water resources—was another universal challenge faced by farmers. As with water management, farmers' efforts to improve soil fertility also had lasting impacts on the landscape and biological diversity. In central Europe, agriculture became the primary land use about 1000 years ago, supporting a rapidly increasing population. Like elsewhere in the world, farmers evolved elaborate ways of improving nutrient use, since this was the basic limitation to expansion of productivity. Sophisticated means of obtaining additional nutrients and energy were developed locally through pasturing systems on heaths and in woodlands, alternating the use of fields, meadows and fallow, giving rise to the region's characteristic landscapes. 
15.	In addition to mastering water supply and input of nutrients, farmers adopted techniques to address diverse challenges, including to reduce risk of disease outbreak, to guard against fire, drought, wind erosion and other natural disasters, and to exploit difficult terrain. In doing so, their management of the land and skills in developing breeds of farm animal and varieties of crop suited to different circumstances, have impacted on the landscape and the cultural heritage of rural areas. In most parts of the world, these processes led to an increase in biological diversity of both domestic and wild species, the creation of semi-natural habitats, and today's farmed landscapes.
16.	However, while technological efforts to overcome the challenges to farming initially gave rise to the cultural landscapes later to be valued by society, further advances in technology, especially in the last century, have led to deleterious impacts. In extreme cases, soil itself has been lost to wind or water erosion on account of inappropriate farming methods. Improvements in technology, availability of capital and a competitive marketplace have led to monculture-based systems replacing mixed farms—together with the landscapes, flora and fauna to which the mixed systems had given rise. A particularly acute and universal problem has been the marginalisation of certain farming systems caused by increasing efficiencies of production elsewhere. Thus production of grains or livestock products in (economically) developing countries may be less efficient than equivalent production in developed countries, despite the substantial competitive advantages to the farmers in developing countries in terms of labour costs and proximity to local markets. Even within the economically developed countries, the continuation of farming systems in marginal areas, such as mountain or arid regions, which are integral to the conservation of the landscape and its biological diversity, may be under threat for similar reasons. 

3.	ENVIRONMENTAL AND CULTURAL OUTPUTS OF FARMING
17.	Farming systems today continue to influence the development of the rural environment. Agriculture has both positive impacts, leading to the maintenance or enhancement of non-trade concerns, or negative effects, such as the pollution of water resources or destruction of landscape features. The main areas of interest are biological diversity, the farmed landscape, historical features and natural disasters.

3.1.	Biological diversity
18.	Research in northern Europe has shown that the great majority of vascular plant species occurring naturally are dependent on farmed open landscapes. If farming were to cease, scrub would quickly encroach on the open land, leading to afforestation and a loss of species diversity. However, the farming systems on which plant diversity depends are typified by low-input, low-output management of livestock, grazed on pasture for part of the year and fed on relatively inefficient fodder crops in the winter months. Clearly, a high-input, high-output intensive system of production, which requires high levels of nutrient input use would not conserve the biological diversity of the grazed lands associated with the former system. It should be noted that in terms of economic efficiency, a low-input, low-output system is not intrinsically less efficient than an intensive system, as efficiency depends on cost and profit variables, especially the levels of debt and capitalisation of the farm.
19.	Similar results have been produced from research on farmland birds in Europe. In one case, it has been shown that a bird species depends for its life-cycle on the supply of particular insects, which in turn only flourish on lands grazed by extensively managed cattle. If farmers adopt different animal husbandry methods, or, for example use certain medications on the cattle, the insects would not survive, leading in turn to a reduction in food supply for the birds. 
20.	The extent to which the biological diversity in these examples is valued, is a cultural judgement to be exercised by society. However, the existence of common values throughout the world is evidenced by international standards and aspirations, set down in conventions and other instruments.
21.	Management of farming systems dedicated to the conservation of biological diversity may require the farmers to undertake costly activities or forego profitable operations. In many cases, this will result in reduced production as the intensity of use of inputs, and hence the level of food and fibre outputs, is diminished. Thus, although the conservation activity is linked to production, output is at a lower level than under the farming system which would otherwise take place.

3.2.	Farmed landscape
22.	For a substantial part of its growth cycle, rice needs to be cultivated in slow-moving water, necessitating flat fields. In hill and mountainous regions this has inevitably led to the creation of terraced landscapes, for example in Japan. While rice can be cultivated at a lower cost elsewhere in the world, cessation of production on terraces would most likely lead to their disrepair and eventual destruction. This would impoverish the landscape as well as increase risk of flooding to communities downstream of the terraces. 
23.	Mixed farm landscapes, created in order to utilise benefits to fertility of rotation and diversity of crops and livestock, are a feature of rural areas throughout the world. However, advances in technology have enabled farmers to specialise their production while increasing productivity—but at the expense of the landscape. In some countries, the cessation of the use of mixed farming patterns has led to impoverishment of the soil and erosion as the soil structure breaks down. 
24.	In certain arid zones, farming bears a particular role to preserve the farmed landscape and prevent its loss to desert. This imposes on farmers the duty to follow specific management techniques to maintain soil in an agricultural condition and to avoid actions which could risk catastrophic soil erosion.
25.	As with biological diversity, some landscape types have been recognised at international  level as having cultural value, thus creating a presumption in favour of their preservation. However, in general, landscape values depend on the judgement of society and governments need to set clear criteria by which valuable landscapes are identified. The conservation of particular farmed landscapes may impose costs on farmers who undertake specific maintenance activities, or who must continue uneconomic farming practices in places liable to abandonment, for the landscape to survive.

3.3.	Historical features
26.	Historical farmland features include archaeological remains, whether under the soil of farmed land or at field margins, as well as field patterns and living remnants of ancient forests. Some features, which society particularly values, may be comparatively recent, such as the century-old field and farm barns which characterise many landscapes in Europe and North America. 
27.	The risk to these elements is that farming efficiency could be increased by allowing or causing the cessation of farming use or destruction of the historical features. In order to preserve them, it may be necessary to ensure that farmers avoid certain activities (such as deep ploughing, planting of trees, or destruction of field boundaries, which would disturb the sites), continue their agricultural use although this may be uneconomic to do so, or undertake maintenance works, which would have cost implications.
28.	As with other environmental and cultural concerns, the value placed on the historical features by society determines the need for their conservation. 

3.4.	Natural disasters
29.	In a semi-natural landscape, the impact of natural disasters is likely to be greatly influenced by farming activities. The cases of rice terraces preventing floods in lower-lying regions, or farmers avoiding desertification of their land, are illustrative. Abandonment of farmed terracing for crop production has been shown to cause the loss of entire hillsides in Europe. 
30.	Prevention of many other types of natural disaster is also dependent on farming methods. In dry regions the build up of scrub, or excess biomass, can result in a substantial risk of fire. Where appropriate farming is practised, the scrub is grazed out, thus protecting the countryside from the effects of the natural disaster. Grazing can also reduce the risk of avalanche in mountainous regions, which is minimised on grazed or cut mountain pastures. The risk of avalanche is considerably increased where snow builds up on long grass.
31.	However, farming can be responsible for provoking natural disasters; for example inappropriate ploughing and land use can lead to loss of soil on a disastrous scale through erosion by wind or water. In these cases, society may expect that farmers adopt certain techniques as part of their normal practice. However, if society demands that farmers undertake specific additional efforts in order to secure the public good of minimising risk of disaster, there may be a considerable additional cost to the farmer not recompensed by the market. 

3.5.	Joint products
32.	In the above examples, some of the environmental and cultural non-trade concerns can only be met through certain farming activities. It has been suggested that, in order to minimise supposed distortions to trade, the products of such activities should be thrown away and not placed on any market. While this position is untenable on account of the cost and waste inefficiencies, the fact of joint production of both marketable products and environmental or cultural services should not be used to conceal distortive economic subsidies. Accordingly, wherever society, in pursuit of a legitimate environmental or cultural objective, demands that farmers undertake efforts to deliver the public good, then governments should only recompense farmers for their additional costs and income foregone, taking fully into account the farmer's income from selling commodities on the market.

4.	PRESSURES ON FARMING PUTTING AT RISK NON-TRADE CONCERNS
33.	Of the various factors influencing farming practice, undoubtedly the most significant agent of change is the development of available technologies. The application of new inputs, machinery, seed varieties, bloodlines, as well as improved efficiencies in processing, storage and handling facilities for commodity products, allow farmers the tools to increase production and reduce costs. In the absence of policy instruments to mitigate the message from the market, farmers are forced to focus on narrow economic concerns in considering whether to adopt new techniques. For all but a few (philanthropic) commercial farmers, the provision of public goods will hardly enter the equation. 
34.	Pressures on price lead farmers either to cut costs or to increase yield (or both). If this process is unchecked by public policy, farmers can be tempted to adopt any means to increase yields and output. This process may lead farmers to destroy landscape features, in order, for example, to enlarge field size, and increase use of inputs, notwithstanding the negative impact on nutrient-adverse wild plants and the risk of pollution events. In addition, many farmers may find themselves on a competitive and technological treadmill: the fact that one farmer in a region derives economic benefit from using a new technique, means that all farmers have to follow in order to maintain their competitivity. 
35.	The narrow economic focus, largely ignoring the non-trade concerns of farming, has led to four clearly identified trends in agriculture throughout the world, particularly in developed countries:
•	Concentration, where farmers producing the same product congregate in certain zones and so increase economies of scale, for example by lowering supply costs;
•	Specialisation, leading to the decline of the mixed farm and rise of specialist or monoculture farms;
•	Intensification, resulting in increased use of inputs, higher operating costs and higher yields needed to cover the increased costs;
•	Marginalisation, resulting in the underuse and in some places abandonment, of farmland handicapped by structural disadvantage.
36.	All of these trends militate against the continued provision of adequate responses to non-trade concerns: high-value landscapes are lost; biological diversity suffers; pollution of water resources increases; and production methods become divorced from public expectations. 
5.	
CONCLUSIONS 
37.	In devising policy responses to secure the provision of non-trade concerns, governments have to ensure that the clear objective of the policy is to secure the public good. This requires that policies are targeted, have clear objectives, are administered in a transparent manner, and are implemented in no more than minimally trade-distorting ways. 
38.	In the case of joint products, clearly there is an association between the environmental or other public good produced and the agricultural production. 
39.	In order to meet society's environmental and cultural non-trade concerns, a range of policy instruments should be considered, including the following:
•	Encouragement actions, such provision of extension services, publicity and public campaigns (which can be led by non-governmental organisations);
•	Compulsory regulation, where appropriate, for example to cover farm-related activities which should be prohibited. Regulation may be an appropriate option in order to prevent pollution; 
•	Voluntary programmes designed to persuade farmers to deliver public goods, such as environmental services. By creating a market in provision of public goods, farmers can bring environmental and cultural factors into their economic decisions on an equal footing with the commercial pressures presented by the marketplace for their crops and livestock products.
40.	Where farmers are required to go beyond good agricultural practice, or normal practice in the region concerned, to deliver the non-trade concerns to society, governments should be able to compensate them for the costs and income losses incurred.
41.	The reform process under the auspices of WTO rules should allow governments to implement policies which meet legitimate environmental and cultural non-trade concerns.