Almond farm profitability under agroecological management in south-eastern Spain: Accounting for externalities and opportunity costs

Abstract

Agroecological practices have been shown to control erosion, increase soil fertility, carbon stocks, pollination and biodiversity. As a consequence, these ecosystem services can contribute to a better farm economic resilience on the long-term; however, empirical evidence is scarce. In this study we aim to understand the economic performance of agroecological practices in almond orchards and the relevance of different economic and policy scenarios to incentivise the upscaling of agroecological practices. We investigated the development of the net present value (NPV) of several agroecological practices (no tillage (NT), green manure (GM) and compost (CM)) as compared to conventional tillage (CT), as well as the effect of internalising externalities through payments for soil carbon sequestration and by costs of erosion. Finally, we explored the effects of price premiums and public greening payments, on farm NPV. We found that all management regimes were profitable and that CM had a 17.2% higher NPV than CT, while both GM and NT had lower NPV than CT (69% for GM and 90.1% for NT). We found that despite NT and GM have higher soil organic carbon stocks, these provided a negligible additional income via carbon markets. CT had the highest externality costs of erosion but still its NPV was higher than NT and GM, despite the strong reductions in costs of erosion in NT and GM conferred by vegetation covers. We found that a price premium of 45% was necessary to make NT's economic performance comparable to that of CT, while a 27% price premium would be needed to make GM comparable to CT. Compensation through public greening payments would be in the order of €644 ha−1 y−1 for NT and €387 ha−1 y−1 for GM to have a similar NPV as CT. Our results suggest a trade-off between income from yield and costs from unaccounted externalities. We also find that private and public policy incentives could reverse this outcome, but requiring a large investment. Of the analysed agroecological practices, compost application appears the most promising to be scaled-up to improve both economic and environmental performance, and further research is needed to determine the outcomes of a combination of compost and vegetation covers.