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Business.2010 newsletter: Agribusiness

Volume 3, Issue 2 - February 2008: Agribusiness

Agriculture and biodiversity: challenges and opportunities for agribusiness

Annik Dollacker
Ecosystems Focus Area, World Business Council for Sustainable Development
Juan Gonzalez-Valero
Ecosystems Focus Area, World Business Council for Sustainable Development
Agriculture is one of the key motors of the global economy. It is a source of foods, fibers and, increasingly, fuel. It provides livelihoods and subsistence for the largest number of people worldwide. It is vital to rural development and therefore critical to poverty alleviation. Cultivated land, including arable lands and shifting cultivation, covers approximately 24% of the world’s land area. Partly or fully irrigated agriculture claims 70% of the world’s developed fresh water supplies. Today, agriculture accounts for over 38% of global employment.

Biodiversity and the ecosystem services it supports are crucial for successful agriculture. Agriculture relies on biodiversity for pollination, the creation of genetically diverse plant and crop varieties, development of robust, insect or disease-resistant strains, crop protection and watershed control. In short, agriculture has a high level of dependence on the whole range of ecosystem services.

It is estimated that a significant amount of the world’s wild biodiversity is found in or around agricultural landscapes. Historically, agriculture served to attract and create new strains of biodiversity. It led to the creation of new plant and seed strains, attracted new animal species and fashioned fresh habitats for biodiversity. Together agriculture, biodiversity and ecosystems constitute a finely interwoven mesh of cross-cutting impacts and challenges. Today, they face a plethora of common threats. Climate change is driving species loss and leading to desertification. Likewise, a growth in the number of alien invasive species is threatening biodiversity and compromising agricultural produce. At the same time, demands on agriculture and pressure on biodiversity are forcing the two into competition.

The last 150 years have witnessed largescale conversion of land to make way for agricultural and other activities to address demand from the growing world population. Land-use change has both positive and negative impacts. Biodiversity can benefit from agriculture. Making land productive often helps to attract greater biodiversity, while conversion of land for agro-forestry also encourages greater levels of biodiversity. By that same token, negatives can become positives, land that was once considered unproductive because it lacked the necessary nutrients for crop production, often supports a high number of species; this is now widely acknowledged as very important. But deforestation, for example, to make way for agricultural activities has been a significant driver of biodiversity and ecosystem loss.

Global agriculture is under tremendous pressure. Population growth alone is not solely responsible for driving demand for food and non-food crops. As populations are becoming wealthier, consumption patterns are changing and demand for protein such as meat and milk products is going up. The production of 1 kg of chicken meat requires 2 kg of grain, for example, which further amplifies the demand on grain, not to mention increased demand for virtual water. It is estimated that world cereal stocks are currently at their lowest peacetime levels for more than two decades. Similarly, rural-urban migration is reducing the availability of agricultural labor. The UN Population Division estimates that, for the first time, the global urban population has outstripped the rural one, putting greater pressure on farmers to increase production to feed urban populations. In addition, the quest for carbon-neutral energy sources, as well as water scarcity, global food sourcing, fluctuating commodity prices and disproportionate government support to agricultural investment all collude to put further pressure on ecosystems and biodiversity.

Biodiversity is fundamental to agriculture, food production and sustainable development. For innovation in seeds, biodiversity is the crucial ‘raw material’. Therefore, biodiversity loss represents a significant business risk. The agricultural sector and the down-stream value chain — food, biochemistry, pharmaceutical, and textile industries — are particularly vulnerable. They face operational risks, including diminishing supplies or rising costs of key resources and inputs, such as raw materials and water, for example. Other potential challenges include governmental restrictions on access to biodiversity; damaged reputations and licenses to operate if public expectations are not met; and potentially restricted access to capital as the financial community adopts more rigorous lending and investment policies.

As the world’s population continues to grow, with the knock-on effects this will have on requirements for land (for building and other uses), and demand for renewable resources to counter climate change continues to rise, it would be unrealistic to set past species diversity on cultivated land as a desired target. This level of ambition ignores not only the source and origin of this ‘diversity’, but also generally the fundamental requirements of sustainable development, biodiversity and ecosystems.

As overall land is limited and further encroachment into pristine habitats not sustainable either, agriculture has to be made more effective and sustainable on the land already cropped. This realization is not altogether recent. In the past 50 years, without the use of ever-improving agricultural technologies (seeds, crop protection products, fertilizers, mechanization, irrigation, etc.) a landmass of the size of North America would have had to be turned into farmland. Post war needs shaped agricultural policy which tended towards increased productivity at the expense of wildlife and agro-ecosystem sustainability. Integrated technology knowledge only really came into its own in the 1980s and 1990s.

Sustainable agriculture
The major challenge today therefore is to secure and increase agricultural yield while at the same time conserving biodiversity, ecosystems, and resources as well as maintaining a healthy base for those who rely on agriculture for their livelihoods. In other words, balancing agricultural productivity with the needs of ecosystems and biodiversity to ensure they are all able to deliver their services in a sustainable manner.

The key to achieving this lies in the implementation of sustainable agriculture. This more holistic and systemic approach integrates the three pillars of sustainability: profitability, environmental protection and social equity. It includes the premise that agriculture needs to be managed while supporting biodiversity and ecosystem health. Integrated Crop Management (ICM) strategies that are being implemented include, among others, setting biodiversity conservation goals for farmland, such as maintaining or enhancing wildlife habitats. Similarly, low-till, and conservation agriculture are also widely promoted approaches. Low-tillage avoids plowing the soil. Not only does this circumvent the use of carbon-emitting fossil fuels that accompanies tractor plowing, this approach — often facilitated by herbicides — also helps avoids soil erosion and improves water retention, by maintaining more organic material in the soil.

he agricultural sector possesses a wealth of biodiversity-relevant knowledge and therefore has tremendous scope for the effective management of ecosystems and biodiversity resources. Farmers are the stewards of the agricultural landscape, its supporting ecosystems and biodiversity.

Crucially, business has a vital role to play in achieving agricultural sustainability. Particularly, those companies in the bio-crop and agricultural sectors can deliver solutions that make agriculture more effective. Some WBCSD member companies are continuously working to develop crop technologies that make agricultural production more effective while respecting biodiversity. Available solutions include energy and water-efficient irrigation techniques, energy- efficient harvesting mechanisms, etc. Similarly, green biotechnology solutions for new traits of seeds (higher yields and quality) and crop protection technologies will also help to achieve biodiversity and ecosystem-related objectives.

Market mechanisms
Market mechanisms too may help achieve sustainable agricultural production and exploitation; particularly for companies further down the value chain that rely indirectly on agriculture and agricultural products. Examples include paying farmers for the supply of ecosystem services such as field margin management, watershed protection or planting cover crops to prevent soil erosion. Trading environmental liabilities such as carbon emissions, wetland mitigation credits, or even biodiversity restoration credits may provide incentives for sustainable consumption. Finally, the use of certification schemes for sustainable production practices could also result in biodiversity and ecosystem gains as well as offer profitable business opportunities for farmers. These may prove essential if integration of biodiversity enhancements into agro-ecosystems is to yield positive results.

To advance the goal of encouraging agriculture which protects or enhances biodiversity, there is a compelling need to devise workable market mechanisms to quantify and monetize the economic value of agriculture’s ecosystem services for the beneficiaries of those services.

Many companies, both in the agricultural sector and further down the value chain, are willing to make the investments and develop the technologies and approaches to contribute towards sustainable agriculture as witnessed by the number of businessled initiatives established to standardize certification procedures and environmental standards. However, to do so they need to gain an economic return on investment and therefore rely on supportive sciencebased policy frameworks and Intellectual Property Rights (IPRs).

Governments need to set targets and provide the necessary policy and market frameworks. However, such targets will remain moot if adequate enforcement mechanisms are not in place. Similarly, any policy framework needs to be properly integrated across a wide variety of sectors and technologies, as well as regions, to ensure that it does not create perverse or counter-incentives. Business and many leading non-governmental organizations are ready to work with governments to achieve these objectives.

Annik Dollacker and Juan Gonzalez-Valero represent the Ecosystems Focus Area at the World Business Council for Sustainable Development (WBCSD).

For further information, please contact Eva Haden, Programme Officer, Ecosystems Focus Area, WBCSD.