Should farmers get steady income?

Farmers have rarely been considered eligible for payment for various ecological services. The old concept of Payment for Ecosystem Services can be used to ensure guaranteed farm income and make agriculture sustainable in the face of land degradation and climate change

By Deepanwita Gita Niyogi
Published: Saturday 15 April 2017


"Society owes the farming community"

P INDIRA DEVI, Professor and director of Centre of Excellence in Environmental Economics, Kerala Agricultural University, Thrissur, Kerala

The net effect of ecosystem services from agricultural systems has always been positive. But these ecosystem services that sustain life remain unpaid and uncompensated, even as farmers continue to be economically poor. The services provided by the farming community should not be restricted to food, fibre and other raw materials alone. In the scientific parlance of ecosystem services, these are “provisioning services”. Payment for ecosystem services can be an economic instrument to acknowledge the ecosystem services from farming. Studies have shown that the value of global ecosystems services is thrice the value of global gross domestic product (GDP). So, the value of such services is much higher than the “provisioning services”.

Payment for ecosystem services should be incentivised for the farming community so that they follow sustainable and safe practices in agriculture. Farmers’ income will also improve. Providing a monetary value for ecosystem services is an important method to raise awareness and convey the importance of ecosystem services to policymakers. The system necessitates research interventions to quantify the economic valuation of such services as well as to identify institutional mechanisms to pay farmers. Society owes payment to the service providers, the farmers.


"A game changer"

PRANAB MUKHOPADHYAY, Professor of economics at Goa University Mere desh ki dharti sona ugle…” Mahendra Kapoor’s immortal song in Manoj Kumar’s Upkar (1967) deified the farmer and his role in nation-building. Interestingly, it can also be interpreted as an early expression in popular lore of ecosystem services. Ecosystems, their services and payments were not part of the lexicon at that time.

Today, when we buy a farm produce off the shelf, what we are paying for is only the costs of production—labour, seeds, fertiliser—plus a marginal profit if any. In addition to the produce that feeds us, the farmer creates social benefits—fresh air, clean water, local climate stabilisation, waste recycling and genetic diversity—for which he/she does not get paid for. So why should we not pay them for this? And if yes, how much?

A group of researchers using the global Ecosystem Service Value Database suggest that the average annual value of ecosystem services emanating from cultivated agro ecosystems is about US $3,839 per hectare (1997 US prices), which amounts to about I2.76 lakh (2016 prices).

The non-marketed component of this value could be to the tune of I1.74 lakh per hectare per annum. For the average Indian farmer, this would be a game-changer and help fulfil the government’s promise of doubling farmers’ incomes.


"Make environment the centre of the growth agenda"

LALIT KUMAR, Associate professor, Department of Business Economics, Bhim Rao Ambedkar College, Delhi University

Indian agriculture is at crossroads. From about 50 million tonnes in 1950s, the output is expected to be around 277 million tonnes in 2017. Though the initiatives of the Green Revolution helped bridge the deficit in consumption and production and reduced imports, the gains were lost by the early 1990s when crop productivity stagnated. There is a huge agro stress now—falling crop diversity, rising incidences of nutrient deficiency in soils, rising incidence of pest attacks and overdrawing of groundwater.

The only way to buck this distressing trend is to compensate farmers for the ecosystem services they generate. Ecosystem services are those benefits generated by the ecological systems that contribute to human wellbeing, both directly and indirectly. The Economics of Ecosystems and Biodiversity study, carried out by the UNEP and funded by the European Union in 2010, calculated the net value of ecosystem services provided by agro ecosystems at I 276,608 per ha per year (at 2016 prices). If implemented, this approach will help fulfil the promise of a guaranteed income to farmers while prompting them to adopt sustainable farming practices. Unlike many other schemes of the government, this approach would not be a subsidy, but a payment for benefits generated by farmers. They have not been compensated for so far due to a lack of a market mechanism.

This approach would provide two main complimentary benefits: transfer real resources to the rural India experiencing falling employment and income decline; and, make environment the centre of the development agenda.


"Need to assess the value of ecosystems"

SOMNATH BANDYOPADHYAY, Associate professor, School of Ecology & Environment Studies, Nalanda University, Patna

In developing countries, public money is heavily invested through a plethora of direct and indirect subsidies, which encourage the injudicious use of inputs, often compromising the very sustainability of farming.

Ecosystem services support soil and biodiversity, regulate nutrient and water cycles and provide oxygen, water and organic matter. It makes sense, therefore, to pay for ecosystem services rather than subsidise production. For example, coffee farmers in Coorg in Karnataka, which is a sensitive hotspot for biodiversity conservation in the Western Ghats, are paid through eco-certification of their products that fetch a premium price in the market.

This makes sense as Coorg is a unique ecosystem and the benefits of protecting ecosystem services translate into biodiversity conservation, protection of watersheds and improved water quality. The challenge, however, is to find a market solution where the transaction is voluntary and based on market demand.

Unfortunately, except for organic fresh food, the link between consumer and producer is generally diffused and indirect. The price premium in the organic fresh food market may not be the best indicator, since consumers may be either paying for their health benefits or avoiding future health costs, none of which addresses ecosystem health. Mediation—both by governments and companies that regulate farm produce—is, therefore, important. And consumers must know the value of the ecosystem services they are paying for. Direct assessment of ecosystem services from farmlands and their scientific valuation, therefore, are needed to determine the “justifiable” levels of payments to such farmers.


"Redefine ecosystem services"

A K GHOSH, Founder director, Centre for Environment and Development, Kolkata

Ecosystems have been categorised under four major categories— provisioning services (food, fuel, etc), regulating services (climate, floods, etc), cultural services (ecotourism, spiritual values, etc), and supporting services (soil formation, photosynthesis, etc). However, some ecologists categorise ecosystem services into goods and services. Food and fibre are undoubtedly goods with a direct market value but derived from nature. In contrast, the three other categories of services—regulating, cultural, and supporting—cannot be put under a direct price tag, but can be valued on the basis of indirect valuation.

Farmers help sustain life for billions of people and that is undoubtedly a provisioning service, but can a provisioning service be equated with other three forms of ecosystem services? For instance, while fisherfolk using wastewater for fish culture in the east Kolkata wetlands provide the additional service of primary treatment of wastewater, can this be equated with the services of the farmers producing and selling food?


"Measure through Gross Environment Product"

ANIL P JOSHI, Director, Himalayan Environmental Studies and Conservation Organization, Dehradun

After World War II, the world began to use GDP to monitor growth. India too adopted the same metric, but we forgot that this is too narrow to assess the total growth, including ecology and environment. This paradigm of growth measurement has resulted in resource scarcity. Commercialisation of precious resources will have several implications. It will create resource scarcity and conflicts and lead to an ecological crisis. Therefore, a balanced development approach, where ecology will have an equal space, is our current need. It shall not only mean ecology, but rural growth as latter depends upon natural resources. The GDP metric will push more urbanisation, whereas ecological growth parameters will invigorate rural growth.

The Himalayan Environmental Studies and Conservation Organization launched a movement to demand Gross Environment Product parallel to GDP so that ecological and economical accounting can be brought in place in the interest of rural people and the country at large. The concept simply demands that ecological growth parameters—forest, soil, water and air—are also measured annually. The state’s effort to increase these resources can be assessed annually like GDP. Addition or loss of resources due to some development activities can be audited for health and safety, so that compensatory measures can be put in place.

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