Multifunctionality of agriculture: An inquiry into the complementarity
between landscape preservation and food security
Abstract:
Without support, the levels of agricultural public goods will fall short of the demand in high cost
countries like Norway, Finland and Iceland. However, as demonstrated in this paper using Norway as
a case, the current support and agricultural activity is far out of proportions from a public goods
perspective. Model simulations show that at most 40% of the current support level can be defended by
the public good argument. Furthermore, the present support, stimulating high production levels, is
badly targeted at the public goods in question. Since agricultural land is a major component of both
food security and landscape preservation, thus giving rise to a high degree of cost complementarities
between the two public goods, it would be more efficient to support land extensive production
techniques, than production per se.
Keywords: Food security, landscape preservation, public goods, agricultural policy, numerical model.
1. Introduction
It is widely accepted that there are externalities and public goods related to agricultural activity, such
as the amenity value of the landscape, food security, preservation of rural communities and rural
lifestyle, cf. Winters (1989-1990) and more recently Peterson et al. (2002) and Hediger and Lehman
(2003). However, the issue is about what implications these externalities should have on national
agricultural policy. What support levels can be defended by the so-called multifunctional role of
agriculture, and what policy instruments are efficient? In the ongoing WTO negotiations, for example,
many high cost countries use the multifunctional aspect to argue for continued high support levels,
even in the form of tariffs and output subsidies. Other low cost countries reject such arguments as
protectionism. The latter view finds support in a recent contribution from Peterson et al. (2002), who
derive the efficient set of policies for a multifunctional agriculture, and show that efficiency cannot be
achieved through output subsidies.
This paper offers an empirical contribution to the multifunctional aspect of agriculture. In
earlier papers we have examined the food security and landscape preservation arguments as separate
issues. In Brunstad et al. (1995a) the food security argument was discussed. A numerical model was
applied to compute what Norwegian agriculture would look like if the only purpose of support was to
provide food security. Compared to the actual activity in agriculture, the analysis indicated a decline in
employment and land use of about 50 %. In (Brunstad et al, 1999), the landscape preservation
argument was examined. A method for incorporating information on the willingness to pay for
landscape preservation inferred from contingent valuation studies, was presented, and implemented in
the objective function of the model mentioned above. To illustrate the method the Norwegian
agriculture was used as a case, and optimal levels of production, land use, employment and support
were calculated. Based on various simulation experiments it was indicated that only a minor fraction of
today’s generous support level would be upheld, and production and employment would drop to low
levels. However, even if the landscape preservation argument was not able to defend today’s levels of
production and employment, it was strong enough to keep a substantial part of today’s agricultural surface
under cultivation.
In this article we discuss the optimal policy when food security and landscape preservation are
simultaneously taken into account. To what degree are these public goods complementary in the sense
that supplying one of them more or less automatically would lead to supply of the other(s)? How much
support is necessary to sustain reasonable levels of public goods and what policy instruments are efficient,
when cost complementarities are considered?
In section 2 we demonstrate some basic principles on food security, landscape preservation
and cost complementarities within a simplified framework. In section 3, these principles are elaborated