| Economic Analysis of Non-market Value of Organic Agriculture | |||
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| Author | Kim, Changgil | ||
| Views | 99960 | Publication Date | 2016.12.30 |
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Background of Research Organic agriculture in a broad sense is a farming system that can sustain soil, ecosystem and human health. Therefore the public services such as environment conservation provided by organic agriculture are known to be more various than conventional agriculture, which is oriented to increase the productivity using high input. The organic land has steadily increased with the government support, however, the recent socio-economic conditions hamper the growth of organic agriculture. Government support is necessary as environmental service provided by organic agriculture cannot be supplied at an optimum level due to the characteristic of public goods. The purpose of this report is to investigate the grounds for supporting organic agriculture by the economic analysis of the non-market value of organic agriculture. Research Methodology First, literature review was conducted regarding the economic analysis of non-market value of organic agriculture and policies of selected countries. In order to assess the non-market value of organic agriculture, replacement cost method(RCM) and choice experiments(CE) are applied. In using RCM, literatures review on the assessment on the impact of organic agriculture for environment conservation were extensively carried out. A survey by questionnaire was conducted to apply CE, based on stated preference to evaluate the willingness to pay for the non-market value of organic agriculture. CE is widely used to estimate the non-market value, and useful methodology that considers multi attributes of the valuation objective comprehensively. RCM and CE are complementary as the former is based on the empirical study and the latter estimates by the questionnaire. Last, the AHP analysis is made on the basis of the survey by questionnaire with experts to determine priorities of policy instruments for vitalizing organic agriculture. Research Results and Implications RCM result shows that the value including both for market and non-market ones of organic agriculture is higher than conventional agriculture by 20~45% for paddy field rice, and by 2~4% for the orchard. The non-market value of organic agriculture outweighs the smaller market value of organic agriculture compared to conventional agriculture. Also, organic agriculture has higher potential to mitigate green house gas emission by 10.6~89.3% than conventional one. If 1% of the total agricultural area is cultivated organically, this is equivalent to 1.1 billion won. According to the estimation of CE, the total sum of the economic value of willigness to pay for the value amounts to 700 to 1,100 billion won, which is 2.2 to 3.5 times market value. And three classes were derived from the analysis of the latent class model. It indicates that differentiated policy approach is necessary to increase the effectiveness of policy implementation. For prioritizing the policy instruments for organic agriculture, the AHP analysis based on the survey by questionnaire for experts reveals that it is necessary to first promote ‘Establishing agri-environment conservation program (first place)’, ‘Consumer education and promotion for the value of organic agriculture (second place), and ’Expanding the sales channel (third place)’, ‘organic agriculture maintenance payment (forth place)’ as a policy instrument. Considering the non-market contribution of organic agriculture to environment conservation and ecosystem restoration, it is important to support their income loss due to the organic practice through maintenance payment for the longer period. And, agri-environment conservation program should be introduced to induce the environmentally friendly agricultural practice. Last, Investment on technology development needs to be accompanied to further expand organic agriculture. Researchers: Kim Chang-gil, Jeong Hak-kyun, Koo Ja-choon, Lee Hye-jin and Kim Yong-gyu Research Period: 2015. 1. ∼ 2016. 12. E-mail: changgil@krei.re.kr |
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