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Agriculture and the Environment in the Nordic Countries

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Agriculture and the Environment in the Nordic Countries TemaNord 2013:558 TemaNord Ved Stranden 18 DK-1061 Copenhagen K www.norden.org Agriculture and the environment in the Nordic countries Agriculture and the environment Policies for sustainability and green growth in the Nordic countries In the future, demand for agricultural products will increase. The agricultural sector must meet the increase in demand without compromising the natural resources of which it depends on and damage fragile ecosystems. Sustainable agricultural practices and green growth is necessary for this to happen and agricultural policy must facilitate such development. How agriculture contributes to water pollution has been in focus in the Nordic countries for many years. In many places, nutrient emissions have been successfully reduces, but targets are still not met. The implementation of the Water Framework Directive makes policies that facilitate reduction of nutrient runoff even more relevant than before. This report looks at experiences from the Nordic countries and makes suggestions for future policies for sustainable agriculture and green growth. The report has been commissioned by the Nordic Council of Ministers. The study was carried out by the Norwegian Agricultural Economics Research Institute (NILF). TemaNord 2013:558 ISBN 978-92-893-2595-0 TN2013558 omslag.indd 1 29-08-2013 08:15:43 Agriculture and the environment in the Nordic countries Policies for sustainability and green growth Anne Strøm Prestvik, Valborg Kvakkestad and Øystein Skutevik TemaNord 2013:558 Agriculture and the environment in the Nordic countries Policies for sustainability and green growth Anne Strøm Prestvik, Valborg Kvakkestad and Øystein Skutevik ISBN 978-92-893-2595-0 http://dx.doi.org/10.6027/TN2013-558 TemaNord 2013:558 © Nordic Council of Ministers 2013 Layout: Hanne Lebech Cover photo: ©Stock.xchng. This publication has been published with financial support by the Nordic Council of Ministers. However, the contents of this publication do not necessarily reflect the views, policies or recom- mendations of the Nordic Council of Ministers. www.norden.org/en/publications Nordic co-operation Nordic co-operation is one of the world’s most extensive forms of regional collaboration, involv- ing Denmark, Finland, Iceland, Norway, Sweden, and the Faroe Islands, Greenland, and Åland. Nordic co-operation has firm traditions in politics, the economy, and culture. It plays an im- portant role in European and international collaboration, and aims at creating a strong Nordic community in a strong Europe. Nordic co-operation seeks to safeguard Nordic and regional interests and principles in the global community. Common Nordic values help the region solidify its position as one of the world’s most innovative and competitive. Nordic Council of Ministers Ved Stranden 18 DK-1061 Copenhagen K Phone (+45) 3396 0200 www.norden.org Content Preface........................................................................................................................................................ 7 Summary ................................................................................................................................................... 9 1. Introduction ................................................................................................................................... 11 2. Agriculture and the environment .......................................................................................... 15 2.1 Nutrient runoff to water .............................................................................................. 15 2.2 Greenhouse gas emissions from agriculture ........................................................ 20 2.3 Other environmental problems ................................................................................. 23 3. Multifunctional agriculture and farmer behaviour ......................................................... 25 3.1 Multifunctional agriculture ......................................................................................... 25 3.2 Farmer behaviour ........................................................................................................... 26 3.3 Policy implications of multifunctionality and observed farm behaviour........................................................................................................................... 28 4. Agri-environmental policy instruments in the Nordic countries ............................... 31 4.1 Agri-environmental policy in the Nordic EU-countries ................................... 31 4.2 Agri-environmental policy in Iceland...................................................................... 37 4.3 Agri-environmental policy in Norway .................................................................... 37 4.4 Summary of Nordic agri-environmental policy instruments ......................... 38 5. Nordic experiences in agri-environmental policies ........................................................ 41 5.1 The impact of agri-environmental policy in Finland on phosphorus and nitrogen loadings in water ............................................................................................. 42 5.2 Sweden: Economics of eutrophication management ........................................ 50 5.3 Water protection policies and management in Norway ................................... 57 5.4 Green growth in Denmark ........................................................................................... 61 5.5 Soil conservation in Iceland ........................................................................................ 68 5.6 Taxes and other policies for reducing greenhouse gas emissions from agriculture .............................................................................................................. 71 5.7 The potential of biofuels for mitigating climate change and water quality ................................................................................................................................. 75 5.8 Summary of Nordic studies on policy measures for reduced phosphorus and nitrogen loadings in water ......................................................... 81 6. Policies for sustainable agriculture and green growth .................................................. 83 6.1 Holistic perspectives are needed .............................................................................. 83 6.2 Appropriate policy measures ..................................................................................... 84 6.3 Appropriate point of instrument application ....................................................... 85 6.4 Appropriate processes .................................................................................................. 86 6.5 Lessons that could be important for green growth ............................................ 86 7. Conclusion ...................................................................................................................................... 89 8. References ...................................................................................................................................... 91 9. Sammendrag (norsk).................................................................................................................. 99 Preface Agriculture delivers a combined set of private and public outputs like food products, landscape values, biodiversity and pollution. This is so because agricultural production is directly interlinked with the eco- systems it operates within and the space it utilizes. Inputs like land, wa- ter, air, fertilizers, pesticides, energy, etc., are combined in different pro- cesses. Out of this process come tradable private goods like grain and public goods and bads like landscape values, food security, pollution etc. A sustainable agriculture requires production processes that optimize on and balance environmental, social and economic outputs. This report focuses on how agricultural policy measures, in particular payments and compensations to farmers, can be developed in order to support an environmental sustainable agricultural production and green growth. This is done by a literature review on Nordic studies. Important considerations when formulating policies for sustainable agriculture that are identified through this study includes precision, transaction costs and farm behaviour. Holistic perspectives, appropriate policy measures, appropriate point of instrument application and appropriate processes are needed to ensure a sustainable agriculture. Economic instruments like taxes, subsides or tradable emission per- mits could be used to reduce water pollution for nitrogen and phospho- rus and to reduce GHG emissions from agriculture. The report analyses how economic instruments could be applied to tradable input factors like fertilizers and feeds, to particular production methods or to food- products. Economic instruments could be used in combination with in- formation and norm-building instruments. Participatory processes could be important for farmers response to these instruments. The report discusses different possibilities to approach the green growth concept in the case of agriculture. Green growth could be seen as a development where the economic value of agriculture grows without increasing food production. This could be achieved through increased production of services and value added products that receive a price premium due to specific production methods or locations. Magnus Cederlöf Chair the
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