Local Agriculture, Global Ecosystems, and Human

Transcript:Local Agriculture, Global Ecosystems, and Human:
Local Agriculture, Global Ecosystems, and Human Survival Local Food Summit. Anne Arbor, Michigan. March 31, 2014 Joshua Farley Community Development and Applied Economics Gund Institute for Ecological Economics University of Vermont Professor Visitante Especial Universidade Federal de Santa Catarina Planetary Boundaries and Conventional Agriculture How do we solve this problem? How serious is the problem? Essential and non-substitutable resources Ecological thresholds Economic/physiological thresholds Can markets solve it? Economic efficiency and just distribution Ecosystem services Technological advance What is the role of local agriculture? Essential and Non-substitutable Resources Food, water, energy, ecosystem services Essential to human survival with no adequate substitutes Schelling, 2007 Critical thresholds Ecological Physiological Inelastic demand Large changes in marginal value with small changes in quantity E.g. grain prices in 2007 Ecological Thresholds and the Supply Curve Must sum together all costs: labor, capital, biodiversity loss, nitrogen, climate change, etc. (marginal cost) Economic output (fossil fuel economy) Social/Physiological Boundaries Physiological Boundaries/Thresholds and the Demand curve Value: low and stable Trade-offs: relatively unimportant benefits Value: shift from marginal to total value (e.g. diamond-water paradox) Trade-offs: Life sustaining benefits Value: Increasing rapidly with decreasing quantity. Trade-offs: Resilience, increasingly important benefits Opportunity cost Economic output (fossil fuel economy) Irreconcilable Thresholds? Market Solutions? Negative externalities Must be internalized for efficient allocation Monetary valuation (implies substitutability) How do we account for changing values? Army of technocrats providing data to politicians? $ $ Market demand in an unequal world Competition and self interest Americans spend 6.7% of income on food for home consumption 11.6% of food dollar goes to farmers <1% of income spend on raw food How did you react when wheat prices tripled? Elasticity of demand 1% in retail prices ~.08%  in consumption 1%  raw food prices, .001%  consumption Market demand in an unequal world Many poor countries spend >70% of income on food for home consumption Perhaps 50% spent on raw food? How do poorer countries react when wheat prices triple? Arab spring Elasticity of demand ~.7 Budget share and elasticity Market demand = preferences weighted by purchasing power Market Demand, Unequal World 2700 Physio thresh w/ equal distribution Eco thresh nitrogen Eco thresh carbon 1245 1800 Trade-offs: Starvation now or in future Sustainability and justice vs. preferences Market Supply and Demand Marginal market costs (Market supply curve)) Poor people have no demand Physiological boundaries for rich Price food output Market Allocation of Essential Resources on an Unequal