The Development of Agri-environmental Indicators at the OECD

Jim Sinner, Senior Analyst, MAF Agriculture Policy

In 1993, the Agriculture Committee and Environment Policy Committee of the Organisation of Economic Co-operation and Development (OECD) established a Joint Working Party on Agriculture and Environment ("the JWP"). The JWP is examining the relationship between agricultural and environmental policy, and in particular the impacts of agricultural policy reform on the environment.

Among a range of work undertaken by the JWP is the development of agri-environmental indicators, with the following objectives:

  • to provide information on the current trends and state of the natural environment in agriculture; and
  • to assist policy makers in the analysis of the environmental impacts of policy decisions and market processes, and to monitor the effectiveness of policies promoting sustainable agriculture.
Conceptual Issues

The JWP is considering two possible conceptual approaches to the use of agri-environmental indicators. A rigorous analytical approach would he to see agri-environmental indicators as parameters in a model of the impact of agriculture on the environment. This model would have three components, or sub-models:

  1. the relationship between policy changes and farmer behaviour, e.g. choice of inputs;
  2. the relationship between input use, production and environmental quality;
  3. the relationship between changes in environmental quality and changes in social well-being.

If all the parameters (i.e. indicators) were available, such a model could be estimated mathematically and used to determine the effect of policy options on both production and environmental outputs, as well as on social welfare (i.e. how environmental changes are valued by the community). The necessary information is not currently available to enable estimation of such models, although with the increasing use of geographical information systems the information may become available in five to ten years. The process of selecting and collecting agri-environmental indicators will contribute to the availability of this information. Thus, those who are selecting agri-environmental indicators should consider which indicators will be most useful for this kind of analysis.

A less rigorous but more pragmatic approach is to use indicators to show trends in the state of the environment, and then look for systematic relationships between policy changes and changes in environmental quality. In other words, indicators simply give an "indication" of the direction and relative magnitude of the environmental impacts of policy change. Where the cause of these changes is not clear, it would be necessary to conduct more detailed research to validate tentative conclusions drawn from the indicators. This research might usefully apply the framework of the more rigorous approach. Furthermore, as data and modelling improve, this approach can evolve towards the more rigorous approach described above.

New Zealand has tended to support the more pragmatic approach in the OECD, recognising that government bodies need better environmental information for policy-making, even if there is not sufficient information for scientific certainty. It has also been pointed out at the OECD that problems with data inconsistencies and aggregation are not unique to agri-environmental relationships. A certain trade-off will always remain between the scientific accuracy and statistical validity of micro-level data, and the policy relevance, feasibility and cost-effectiveness of using "averages".

Certain cautions about the use of indicators have also been recognised in the work at the OECD:

  • Indicators of changes in farm production, input use and environmental quality should not necessarily be taken as indicators of the effects of policy change; such an interpretation could only be confirmed if all other variables except policies were constant over the time period under observation;
  • Indicators of changes in input quantities should not necessarily be used to infer changes in environmental quality; similarly, differences in aggregate input quantities or input use per hectare across countries should not necessarily be used to infer differences in environmental quality across countries;
  • Estimates of policy linkages should be used with caution in analysing the environmental impacts of policy changes in situations that are very different from those under which the parameters were estimated; the economic and environmental impact parameters may not be stable with respect to different policy situations.

Taking a rigorous approach to the use of indicators, i.e. developing a comprehensive, three-part model as described above, would overcome most if not all of these constraints over time.

New Zealand Interests

New Zealand's objectives for the OECD work are two-fold: to assist in the development, measurement and use of agri-environmental indicators within New Zealand; and to enable the OECD to undertake monitoring and analysis that will contribute to agricultural policy reform, i.e. further reduction in subsidies and other forms of support for agricultural producers.

The main focus of the OECD work is on the use of indicators for policy analysis, both by the OECD itself and by member countries. This is consistent with New Zealand interests. Indicators that are "farmer-relevant" are also needed, so that farmers can use indicators themselves in making farm management decisions, but the focus in the OECD is on policy relevance. Many of the OECD indicators are likely to be farmer-relevant as well, although other indicators may be needed that are more meaningful and measure able at the farm level.

The Ministry of Agriculture (MAF) sees indicators as contributing to the process of agricultural policy reform in a couple of ways. Even without substantive analysis, collection and reporting of indicators will help to identify environmental problems associated with agriculture, and this will help to highlight subsidies and other forms of protection that may he contributing to those problems. Further, substantive analysis of the indicators would help to confirm the environmental effects of subsidies. MAF anticipates this would support efforts in promoting further reform, although we recognise that the relationship between subsidies and environmental effects could turn out to be more complicated than we have assumed to date.

Indicators will also be important in monitoring the effectiveness of policies targeting environmental problems in agriculture. Given that the Uruguay Round Agreement of Agriculture provides an exemption, subject to certain condition, for environmental subsidies, MAF is concerned that some countries will use environmental payments as a vehicle to maintain or even increase the level of assistance to farmers. Indicators will provide some discipline on this transfer of assistance, in that the credibility of environmental programmes will be called into question if indicators do not show improvement in the problems the programmes are meant to address.

The GATT exemption for agri-environmental programmes covers a nine-year period, 1995-2004. MAP expects that a new round of negotiations will begin around 1999 or 2000, with one possible issue being the scope and criteria for the environmental exemption. if the OECD has by that time developed and used indicators for analysing agri-environmental programmes, this will help in the negotiating process in terms of whether additional criteria should be considered to ensure that exempted programmes actually achieve their environmental objectives.

Preliminary Indicators Under Consideration

The development of indicators by the OECD's Joint Working Party is still at a preliminary stage. A meeting of member country experts was held in December 1994, at which time a set of twenty indicators were proposed, based on the following criteria:

  • policy relevance: The indicator should address the agri-environmental issues identified by the JWP and contribute to the understanding, analysis and interpretation of these issues.
  • analytical soundness: The indicator should be theoretically well founded and be based on international consensus about its validity. It needs to be easily communicated to policy makers, economists, scientists, land users and the public.
  • measurability: Where possible, the indicator should be developed from established national or sub-national data. Indicator definitions and methods of measurement should be consistent between countries. However, the attributes measured for each indicator should also be sensitive to specific national and sub-national situations. For example, the relative importance of the attributes of the agricultural soil degradation indicator (water and wind erosion, salinisation, acidification, etc.) will vary between and within countries.
  • appropriate level of aggregation: It is important to define the indicator at a level (i.e. farm, sectoral, regional, national), at which it can still be meaningful in policy terms and does not conceal more than it reveals. This criterion highlights the issue of encapsulating the spatial and temporal diversity of the environment and the geographical scale of different environmental issues ranging from the farm through to the global scale. Indeed, the extent to which different agro-ecological zones have varying physical resource characteristics and/or property rights associated with those resources might change the impact of environmental outcomes that may arise from farming in those zones.

The proposed set of indicators are limited to "input" and "output" type indicators, including both the positive and negative environmental impacts of primary agriculture. At this stage the indicators do not cover upstream' downstream activities related to agriculture, or environmental impacts on agriculture, such as effects which climate change may have on agricultural productivity.

Following are the indicators currently under consideration, with proposed definitions and methods of measurement, in rather general terms. It is important to note that no consensus has been reached on these indicators within the OECD. Some of the following proposed indicators may be dropped, new indicators may be added, and revisions to the definitions and measurement methodologies are likely for many others.

A:  Agri-environmental Indicators of Inputs into Agriculture

This group of agri-environmental indicators provides information on the "inputs" into agricultural activity which can in turn lead to impacts on environmental quality. However, they should not necessarily be interpreted as indicators of environmental quality.

1 Agricultural Nutrient Balance

Definition: 'Excessive' fertiliser use (including chemical fertilisers, livestock manure and sewage sludge) can contribute to problems of eutrophication, acidification, climate change and the toxic contamination of soil, water and air; while under application may cause the degradation of soil fertility.

Measurement: Gross nutrient balances of the total quantity of nitrogen (N) and phosphate (P), respectively, applied on agricultural land from the use of chemical fertilisers and livestock manure, minus the amount of N and P absorbed by agricultural plants.

2 Pesticide Use by Agriculture

Definition: Risks associated with pesticide use (including fungicides, insecticides7 herbicides and other pesticides), especially the persistence, mobility and toxicity of active pesticide ingredients in soil, water and air, and in both the human and wildlife food chain.

Measurement: Follow a two-track approach:

Calculate the quantity of active pesticide ingredients divided into four pesticide groups (fungicides, insecticides, herbicides, other pesticides) per hectare of agricultural land or arable and permanent crop land.

Commence work on environmental risk classification, in consultation with the OECD Pesticide Forum, so that eventually pesticides can be classified into groupings based on their potential environmental risk.

3 Crop Yields

Definition: Long term crop yield trends to provide information on the biological productive capacity of agricultural land and the ability of agriculture to sustain resource production capacity and manage production risks.

Measurement: Long term yields of major crops per hectare and the variability of crop yields indicated by the standard deviation of yields per hectare.

4 Fertiliser Management

Definition: Environmental impacts caused by the leaching and volatilisation of fertiliser nutrients depend not only on the quantity applied and the conditions of the agro-ecosystem but also on the farm management practices with respect to fertiliser application and storage, especially with respect to the handling, storing and disposal of livestock manure.

Measurement: The extent of the livestock population that is subject to manure management practices and the management practices used for chemical fertilisers/sewage sludge that minimise environmental impacts, including the type of livestock housing, the type and capacity of manure storage facilities, and the periodicity and method of application.

5 Farm Pest Management

Definition: Environmental impacts caused by the leaching and volatilisation of pesticides depend not only on the quantity applied and the conditions of the agro-ecosystem but also on the farm management practices which effect the application of pesticides.

Measurement: Share of the total arable and permanent crap land on which integrated pest management practices are adopted.

6 Agricultural Soil Conservation Management

Definition: While soil erosion results from the combined effects of precipitation, wind and topography, this can be exacerbated by the adoption of certain farm management practices, such as overgrazing and monocultural cropping.

Measurement: Share of the total agricultural land area on which soil conservation practices are adopted, including the use of winter cover crops and rotation systems, till age practices that minimise soil erosion, and the level of livestock stocking densities.

7 Irrigation Management

Definition: Management and the type of an irrigation system will affect the efficiency of water use and hence the extent to which it impacts on natural habitats, causes water contamination, salinisation, waterlogging, acidification and leads to sediment run-off and erosion.

Measurement: Area of different categories of irrigation management systems, determined on the basis of their relative efficiency of water use, as a share of the total irrigated agricultural land area.

8 Whole Farm Management

Definition: Sustainability at the farm level is dependent on the integration of the social, economic, and ecological components that comprise a farm, hence, the importance of a whole farm systems approach to farm management, which implies access to and use of decision support systems, and the training and educational improvement of farmers.

Measurement: The JWP has noted that this indicator merits further consideration although no single method of measurement has yet been outlined. Possible methods of measuring the indicator include the combination of various related management indicators in an index number formulation; the extent of organic farming; the provision of extension and advisory services to land users; and also the adoption rate by farmers of environmental farm plans, standards and licences (e.g. for pesticide application). =_KT_=

B:  Indicators of Environmental Outputs from Agriculture

This group of agri-environmental indicators provides information on the environmental impacts or "outputs" from the agricultural production process.

9 Agricultural Soil Degradation

Definition: Soil quality is affected by natural processes, mainly water and wind erosion and topography, but can be exacerbated by farming through the displacement of soil materials or soil erosion, and the chemical and physical deterioration of the soil, including soil salinisation, acidification, toxic contamination, compaction, waterlogging, and declining levels of soil organic matter.

Measurement: Degree and the share of the total agricultural land area affected by soil degradation from the effects of water and wind erosion, salinisation, acidification, toxic contaminants, compaction, waterlogging, and declining levels of soil organic matter.

10 Water Pollution from Agriculture

Definition: Impact of agriculture on surface, ground, and marine water quality from run-off or leaching of nitrogen, phosphorous, toxic pesticide residues, acid substances (mainly ammonium) and soil sediment.

Measurement: Quality of surface, ground and marine waters respectively, measured by concentrations in weight/litre of water of nitrogen, phosphorus, dissolved oxygen, toxic pesticide residues, ammonium and soil sediment.

11 Greenhouse Gas Emissions from Agriculture

Definition: Emissions of greenhouse gases may cause global warming and lead to climate change. Agriculture is both a source of these gases, mainly from fossil fuels, fertilisers, ruminant livestock waste, rice paddy fields, and the decrease in organic matter from soil erosion; and also a sink for these gases, large]y by the fixation of carbon by soil organic matter and crops.

Measurement: A net balance of the release and accumulation of greenhouse gases - carbon dioxide (C02), methane (CH4) and nitrous oxide (N2 0) - by agriculture expressed in CO2 equivalents. It may also be necessary to reveal the level of uncertainty for the estimates of this indicator.

12 Acid Air Emissions from Agriculture

Definition: Through the use of fertilisers, combustion of fossil fuels and burning of waste, agriculture contributes to acid forming air emissions, which can damage agricultural and forestry production, wildlife habitats, buildings, and give rise to respiratory health problems. Agricultural plants can also potentially act to absorb acid air emissions.

Measurement: Annual emissions of potential acid substances (including sulphur dioxide, nitrogen oxides and ammonia) from agriculture expressed in acidification equivalents.

13 Agricultural Biodiversity

Definition: Biodiversity of plants and livestock used for agricultural production is important for the genetic conservation and improvement of agricultural plant varieties within species and livestock breeds, however, the dependence on a limited number of varieties and breeds for agricultural production may increase their susceptibility to pests and disease and in turn lead to the greater need for chemicals to protect against these risks.

Measurement: The total number of varieties/breeds used for the production of major crops/livestock; and the share of the three main varieties/breeds used in total crop/livestock production, respectively. In addition, record the number of plant gene banks in a country, the year of their establishment, and the number of species and varieties that they hold.

14 Natural and Semi-Natural Habitats affected by Agriculture

Definition: Agriculture can harm wildlife through its impact on natural habitats, originating from the adoption of certain fanning practices/systems and the leaching of fertilisers and pesticides, although certain types of wildlife may become dependent on specific kinds of fanning systems. Moreover, agriculture can also adversely affect natural habitats through increased contact between agricultural and non-agricultural land, the fragmentation of habitats within agricultural areas, and also the removal of certain habitat features such as wetlands, although some types of farming systems may give rise to specific habitats on which certain types of wildlife depend.

Measurement: Three methods of measurement are proposed:

  • Changes in the area of selected "endangered" habitats, such as wetlands, woodlands and pasture, and changes in features of small scale habitats (e.g. field hedges, open ditches, stonewalls, etc.);
  • The fragmentation of natural habitats measured by the change in the perimeter length of natural habitats in agricultural lands and the change in the number of these remnant natural habitats in agricultural land;
  • change in the length of the "contact zone" between agricultural and non-agricultural lands (by region) divided by the total land area of the region.
15 Agricultural Landscape

Definition: The protection of landscape is accepted as an important objective for many OECD countries, so as to maintain cultural heritage and public access to the countryside. However, the relevance of the landscape issue is questioned by some OECD countries as landscape is not considered to be related to agriculture as such because it is largely an aesthetic question; landscape is also seen as mainly an issue concerning the preservation of natural habitats which is already covered by the previous indicator; while the landscape issue may also involve preserving certain farming systems and land use patterns which is not viewed as an environmental concern. Moreover, the definition of landscape can be difficult because of the tendency for landscape to be highly site-specific and influenced by particular farming systems.

Measurement: The JWP has noted that this indicator merits further consideration although no single method of measurement has yet been outlined. Any measurement of landscape is hampered, leaving aside difficulties in defining the indicator, by the fact that agricultural practices can lead to both positive and negative impacts on a landscape. Moreover, the measurement of landscape can be difficult because the value placed on a particular landscape and the physical impact of agriculture on a landscape is often highly subjective, while other sectors (e.g. forestry) and attributes (e.g. historical monuments, rural villages) may also contribute to the agrarian landscape. Possibilities that might exist to measure landscape include the use of valuation techniques, such as contingent valuation techniques, and the physical measurement of changes in specific landscape features (e.g. stonewalls, field hedges, trees, etc.)

C:  Other Agri-environmental Indicators Proposed by the JWP

During the Meeting of Experts and the JWP meeting in December 1994 an additional five indicators were proposed. As there was no substantive discussion at the December meetings of these five indicators, they are defined less precisely and the proposed method of measurement for each indicator is described in less detail compared to the indicators outlined above.

16 Sustainable Use of Groundwater Resources by Agriculture

Definition: In many countries groundwater is a scarce resource for which their is much competition between different users, for example, by agriculture, industry, construction and households, leading to the possibility that sectors such as agriculture could be "mining" groundwater.

Measurement: The JWP has noted that this indicator merits further consideration although no single method of measurement has yet been outlined. One possibility that might exist to measure the indicator is to monitor extraction levels by agriculture.

17 Economic, Financial and Social Aspects of Sustainable Agriculture

Definition: The definition of sustainable agriculture, for some OECD countries, concerns not only environmental factors but also economic/financial and social considerations.

Measurement: The JWP has noted that this indicator merits further consideration although no single method of measurement has yet been outlined. One possibility that might be considered to measure the indicator covers the change in long term real net farm output (real value of agricultural production minus the real value of farm costs) and the change in the level of managerial skills of farmers, landowners and land managers in finance, farming practice and environmental stewardship.

18 Farm Animal Welfare

Definition: The JWP has noted that this indicator merits further consideration although no single definition has yet been outlined.

Measurement Although no method of measurement has yet been outlined for the indicator, it is likely that some countries have established regulations and performance indicators, which are being monitored, related to the following basic requirements for animal welfare, including: freedom from thirst, hunger and malnutrition; provision of appropriate comfort and shelter; freedom from distress; the ability to display normal patterns of behaviour; and prevention or rapid diagnoses and treatment of injury, disease or infestation with parasites.

19 Agricultural Net Energy Balance

Definition: Agriculture both uses energy, mainly fossil fuels, and is also a source of energy supply, through biomass production. The net agricultural energy balance is viewed by some as an indicator of the sustainability of agriculture.

Measurement: The JWP has noted that this indicator merits further consideration although no single method of measurement has yet been outlined. However, one possibility is to measure the energy input associated with the agricultural use of fossil fuels per unit of output.

20 Conservation of Agricultural Land

Definition: This indicator reflects some of the ways in which agricultural practices may contribute to land conservation and, therefore, enhance environmental quality through, for example, the improvement of soil quality, flood and landslide prevention, and water conservation.

Measurement: The JWP has noted that this indicator merits further consideration although no single method of measurement has yet been outlined. However, the attributes of the indicator could be measured through, for example, measuring groundwater levels, soil humidity, the length of soil profile, the degree of land slope, the type and quantity of vegetative cover, and the precipitation level.

Recent and Future Developments

The OECD Secretariat is currently conducting a pilot survey of member countries on the availability of data for the above proposed indicators, and have also invited countries to suggest alternative definitions or methods of measurement. New Zealand supplied a preliminary response to the pilot survey.

The Secretariat will then collate the responses and draft a summary paper examining each proposed indicator against the four criteria: policy relevance, analytical soundness, measurability and level of aggregation. After a round of country comments and an informal consultation of experts in October, this document will be revised and then form the basis for discussion at the next meeting of the JWP in December 1995.

The JWP has yet to decide whether to proceed to collect and analyse agri-environmental indicators before all conceptual and methodological issues are resolved. Thus, the earliest the OECD might request data from New Zealand is early to mid 1996, probably beginning with a subset of indicators rather than a full set. New Zealand has taken the position that we have sufficient agreement on a number of indicators to begin to collect and use them. Furthermore, the process of collecting and analysing the indicators will itself help to resolve conceptual and methodological difficulties. As someone once said, you can't learn how to ride a horse by reading a book.

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