An Assessment of the
Economics of Adopting Stewardship
Practices in Livestock Production in
Response to Environmental and
Societal Concerns
Bruce T. Bowman, Chair
Expert Committee on Manure Management
(ECMM)
Canadian Agri-Food Research Council
Background

This Presentation draws on findings from a
Discussion Paper commissioned by the Expert
Committee on Manure Management (ECMM), in
partnership with Policy Branch, AAFC.

Prepared by the Thomsen Corp., Ottawa
August, 2003.

Complete Paper available on-line at CARC:
http://www.carc-crac.ca/
Background

In discussions of our Expert Committee (ECMM),
the issue of “Who Should Pay for adopting
environmentally friendly farm practices” was
identified as a major concern.

Adoption of improved environmental practices
often creates “Shared Benefits” (Public & Farmers)
but not “Shared Costs”.
 Farmers usually can not recover these costs through
increased prices for their produce.
Overview

Discussion Paper is a review of current literature
pertaining to measuring the economic value of
benefits and costs to Canadian society from
livestock production and related activities.
 Identifies nature and extent of literature, including
existing information gaps.
 Establishes relationships between livestock
activities and societal impacts.
 Makes recommendations as to Next Steps in
addressing the issue.
Framework of the
Discussion Paper

6 major categories of Potential Public Impact
(Externality) from livestock production
 Soil, Air, Water, Biota,
Human health, Economic activity
An Externality occurs whenever the welfare of one individual
is directly impacted by the activity of another individual.

4 groupings of Livestock Production (manure)
 Livestock Feeding (CAFO/ILO), Manure storage,
Manure handling & application, Transformation of
livestock by-products
Findings

> 100 literature citations reviewed
(mostly on-line information; some refereed;
Few citations with quantitative impacts)
 44% - manure handling & application
 22% - livestock feeding & confinement
 15% - manure storage
 19% - general, or had multiple
pathways/impacts
Findings

Organized review of manure handling & application
studies using 8 potential pathways for public impacts.
 Two Pathways relate to gases (odour and greenhouse
gas emissions)
 Six pathways involving minerals.
(NH3 emissions, P pollution, nutrient run-off and
leaching, nutrient imbalance and recycling, efficient use
of organic/inorganic N & P, and ambient pollution).
Findings
X = Direct impact; I = Indirect Impact
(excerpt)
Findings

Review of Canadian Valuation Studies
- (estimations of value of various natural resources)
- Topic areas reviewed:
Natural Ecosystems
 Air quality - odour
 Water Quantity
 Water Quality – pathogens (incl. groundwater)
 Climate Change – ghg production
 Health Impacts – direct & indirect
Findings

A limited review of Provincial Regulations
impacting on livestock industry, focusing on
manure management issues (AB, BC, ON)
– Discussion on:
 Instruments for regulations & their impacts
 Targets for reducing mineral losses
 Targets for reducing emissions (NH3)
 Needed improvements in regulatory policies
 Threshold policy targets
 Removal of subsidies for imported feeds
Findings

Economic assessment of externalities of
livestock production in Canada is a somewhat
of a rarity.
Why?
 Difficult to quantify odours and then to determine
an economic value for reducing them.
 Models for integrated assessment of externalities
lack quantitative/monetary impact estimation.
Discussion Paper
Recommendations

Commission 2 parallel studies (for various regions in
Canada) that would assist in development of a
proper policy framework for livestock production
in Canada.
STUDY 1 - focus on quantifying externalities
AS WELL AS the impacts on producers.
STUDY 2 - review existing policies & regulations
that are barriers to adoption of beneficial
management practices.
Discussion Paper
Recommendations…
Study 1
Comprehensive Valuation of the
Impacts of Livestock Production
•
Six Components, focussing on 3 potential
mitigation measures, which are:
1. Composting
2. Biogas Generation (Anaerobic Digestion)
3. Use of Shelterbelts around livestock operations
Discussion Paper
Recommendations…
Study 1 - Valuation of Impacts
1. Develop baseline profile for livestock industry and
manure handling, storage and application options.
- Establish links/relationships between livestock production
and water quality, at [sub] watershed scale at selected sites
based on StatsCan data (areas of livestock concentration,
areas of vulnerability).
2. Identify potential mitigation measures.
- Focus on “active mitigation measures” including
composting, anaerobic digestion with associated biogas
production, in contrast with more passive measures such
as manure storage and crop nutrient management.
Discussion Paper
Recommendations…
Study 1 - Valuation of Impacts
3. Estimate on-farm economics
- Conduct surveys of practising farmers to document type of
manure handling systems in use, problems faced with their
use, their effectiveness on various types and sizes of farms,
and farm information needs - Need for a comparable set of
costs for various regions in Canada.
4. Measure the physical impact of manure management
options on environmental goods
- Collect more accurate data on nutrient and organic matter
retention rates, surface & groundwater leaching rates, and
other impacts on off-farm economics.
Discussion Paper
Recommendations…
Study 1 - Valuation of Impacts
5. Economic valuation of damages (benefits) of
environmental goods
- Valuation of resource services, particularly as applied to
the livestock industry, should build on existing livestock
density and geographical identification work such as that
done by Statistics Canada.
6. Benefit-cost analysis
- Estimation and analysis of the economic and
environmental costs and benefits of livestock production
needs to be done on a comprehensive and systematic
basis for Canada.
Discussion Paper
Recommendations…
Study 2
Review of Public Policy and Regulations
1. Compile various policies and regulations that directly
or indirectly affect livestock production.
2. Identify factors affecting producers’ adoption of
management options. (such studies are rare).
- provides useful feedback to policy makers on the
effectiveness of measures.
- indicates impediments to adoption that could be modified
either through additional or alternative measures.
Discussion Paper
Recommendations…
Study 2
Review of Public Policy and Regulations
3. Evaluate the policies and regulations that act as a dis-incentive
for the adoption of better manure handling systems.
e.g. Regulations that selectively define manure nutrients as pollutants
discourage development of their use and a market value. Producers
will steer away from using manure when commercial fertilizers are not
treated the same fashion …. also defined as pollutants.
4. Develop more livestock production and environment-friendly
policies and regulations for regions of Canada.
e.g. Activities that recycle nutrients. Such measures would create
a ‘real market value’ to livestock manure and its products by creating a
demand for them.
Building on Outcomes
from Discussion Paper

We are clearly lacking reliable, quantitative
information on economic valuation of impacts of
livestock production, and how to share costs and
benefits between the public and farmers.

Proposed studies seem appropriate, BUT will be
costly, difficult to acquire good data and take
years + considerable commitment to complete;
….. In the shorter term… which priorities?
Building on Outcomes
from Discussion Paper…
For remainder of this presentation, I will:
 Provide some complimentary viewpoints,
challenges and opportunities based on key
issues identified in the Discussion Paper.
• Recycling of livestock nutrients
• Composting and anaerobic digestion practices
 Try to narrow focus on selected issues that
can start to be addressed in the near term.
A Fundamental Issue
Large-scale recycling of livestock nutrients
 Most livestock operations import more nutrients
than they export. (US studies - NE, WA, PA)
 Nutrient accumulations in both livestock and
human food chains… not sustainable.
 Can not continue with nutrient imbalances and
maintain current nitrate water quality standards.
 Doubled global N fixation rate in 20th century.
 In many parts of world, P is considered a nonrenewable resource – limited sources (quality).
Zeroing in on the Priorities…
Must focus on policies that promote livestock
nutrient recycling
 Make recycled livestock nutrients competitive
with, & complimentary to mineral fertilizers.
 Bring consistent standards to producing valueadded manure products.
• Basic Requirements – odour & pathogen-free, dried,
able to be bulk-blended with mineral fertilizers.
New “Environmental Technology Assessment in
Agriculture” (ETAA) Initiative under the APF.
 Value-added manure products – tech. & economic assessment.
Zeroing in on the Priorities…

First Step - An assessment to answer the question:
"What needs to be changed to make manure
processing profitable (or more affordable) for
confined livestock operations?”
Manure Processing – treating the ENTIRE manure
volume to reduce / eliminate odours and pathogens.
 What key policy & regulatory barriers exist that impede
this process?
 What will it take to remove these barriers to increase and
stabilize market value of recycled livestock nutrients?
Zeroing in on the Priorities…

Large confined livestock operations should set a
voluntary goal of:
"Making manure processing a Standard Practice”
(odour & pathogen reduction; optional – dewatering).
 Processing and dewatering entire manure volume
gives livestock producers increased flexibility for
safely and economically managing & exporting excess
nutrients. To export nutrients, manure should be
effectively odour & pathogen-free and dewatered.
(2 practices - composting, anaerobic digestion – from
Discussion paper).
Zeroing in on the Priorities…

When manure processing becomes profitable,
nutrient management regulations will become a
safety net or performance baseline.

Farmers will exceed regulations and manage their
nutrients for economic benefit (process driven by
economics rather than by regulation).
 Two primary sources of revenue for manure
processing: biogas / green electricity generation,
and value-added manure products,
…. + possible ghg emission trading credits.
Balancing Issues in a
Sustainable Agriculture System
Traditional
1. Yield/Productivity
2. Environment Issues
Societal Issues
Both are science-based
Since 1970s
3. Societal Issues
In 1990s
 Perception-based, emotional
 Can quickly over-ride other 2
factors.
 Hard to reverse once initiated
Benefits of
Manure Processing

Two positive outcomes resulting from
minimizing odours & pathogens:
1. Greatly reduce societal concerns, which are
voiced through municipal bylaws & provincial
regulations.
2. Give farmers increased flexibility for exporting
excess nutrients from farm – promote large
scale nutrient recycling back to crop
production & reduce dependence on mineral
fertilizers. (whole-farm nutrient balances)
Enabling Policies for
Manure Processing
1. Cost-sharing bonuses for renewable energy
production (increase consumer costs < 0.1 ¢/kwh);
Provide easier access to electrical grids.
 Encourage farm-based renewable energy
2. Incentives for large-scale livestock nutrient
recycling/re-distribution (reduce on-farm nutrient
excesses & dependence on mineral fertilizers).
 Increase market value of recycled nutrients.
Enabling Policies for
Manure Processing…
3. Providing environmental loan guarantees
(collateral) for large capital-intensive projects
– help farmers manage risk when adopting
new technologies – minimal public cost.
4. Incentives for reducing greenhouse gas
emissions; emission trading credit system.
TO SUMMARIZE
Discussion Paper Findings:

Identifies livestock nutrient recycling as important
policy issue.

Identifies composting and anaerobic digestion as
mitigating practices to focus on.
TO SUMMARIZE
Discussion Paper Findings:

Identifies that quantitative information on the
economic assessment of externalities is lacking.

Recommends a comprehensive set of studies to
address the issue….. Will require considerable
resources, commitment and time to achieve.
 A longer-term, comprehensive approach.
The Final Word!
Key Priorities:

Need to develop policies which promote largescale livestock nutrient recycling.

Need to determine what it takes to make manure
processing profitable.

Enact enabling policies to encourage adoption.
For Additional Resources
http://res2.agr.gc.ca/initiatives/manurenet/