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Posts Tagged ‘farmers’

We wanted to start Cow Burps off with a post explaining what it is that environmental economists do and why we do what we do through the use of the topical example of a rising demand for beef.

As this is a life-or-death matter in more ways than one, this post has turned out to be much longer than we anticipated. But please excuse us for this; we promise all other Cow Burps posts will be much shorter!

Currently, the worldwide population of cattle stands at around 1.5 billion, providing humans with milk, meat, and leather.  However, this number may be set to rise with a growing human population and as more of the developing world earn higher incomes, enabling them to afford more meat within their diets (there are other types of food of course but here we stick with beef as part of the theme).

An increase in the demand for beef is likely to increase the prices in the short term, which will encourage cattle farmers to increase their stock and perhaps other people to try their hand at cattle farming, as they try to cash in on the price increase. The cycle of demand and supply does not end here of course but let’s have a look at what happens at this point.

This extremely simplistic scenario should mean good news for meat-eaters everywhere but, if cattle farmers don’t change the way they rear cattle, this means bad news for the environment. Two popular examples of how more cows can be bad for the environment are:

  1. More cows produce more methane (that’s burps to you!) which is a greenhouse gas over 20 times more potent than carbon dioxide; and
  2. Making way for more cows means converting land that may be environmentally valuable into cattle farms.  For example, between 1996 and 2006, the area of land occupied by cattle ranching in the Legal Amazon more than doubled from 23 million to 55 million hectares [1].

(while there are other ways in which more cows mean more trouble for the environment, we won’t go into them now, however if you do want to read a short summary, this article from The Independent is not bad).

So as demand for beef goes up, it makes financial sense for cattle farmers to raise more cows, but it may not make economic sense for society once you take the environmental impacts into account.  This unwillingness (or ‘failure’) of farmers to take into account the environmental costs of their actions, which could very well outweigh the financial benefit, is termed as a market failure by environmental economists. For the example of increased methane emissions described above, this is because farmers do not factor in their contribution to climate change and the costs of climate change (Lord Nicholas Stern says: potentially a lot [2]).  For the problem of land conversion, this is because farmers only value land at what can be produced on the land and sold at markets.

We all know, however, that these global costs are mounting up and becoming increasingly apparent, and that the full value of most types of land is greater than the value of what can be produced on it.  For instance, land values also include the benefits that humans receive from biodiversity, carbon storage and the protection of water sources, to name a few of the environmental ones.  While these may seem like intangible services or concepts that can be difficult to value, environmental economists work to generate precisely this type of data so that those who make decisions cannot use lack of evidence as an excuse.

Of course farmers are not the only ones who are unwilling to think about their impact on the environment and to be honest so long as the global cost does not affect them directly, we cannot expect many to be willing. So, environmental economists also work on how we can use the information about environmental values to create incentives to change the way we use the environment – how to convince farmers to raise less cows for example (if that is the indeed the answer).

This post doesn’t answer the question of how many cows is the ‘efficient’ (optimal) number of cows to service the human population.  However we hope that by reading this, you will get a better sense of how we all, as a society, can find a better answer, rather than falling back on the financially efficient answer, which, as we have seen, is not the economically (i.e. taking into account all values, not just financial values) efficient answer.

– Daisy and Betsy

[1] Greenpeace, 2008. Amazon Cattle Footprint – Matto Grosso: State of Destruction. http://www.greenpeace.org/raw/content/international/press/reports/amazon-cattle-footprint-mato.pdf

[2] BBC News, 2006. At-a-glance: The Stern Review. BBC News Online http://news.bbc.co.uk/1/hi/business/6098362.stm

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