An economic valuation of biodiversity and livestock production in Ireland
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This thesis applies the use of economic valuation techniques for valuing biodiversity focusing on production function approach. Biodiversity provides economic benefits, protects human health and offers food, food safety, recreational and aesthetic enjoyment. Biodiversity contributes to the economy through the provision of many ecosystem goods and services. However, many of the services provided by biodiversity are not traded in the marketplace so do not have an actual price or commercial value. Economics provides valuation techniques to help the decision-making process make better informed choices over trade-offs between biodiversity protection and livestock production and contribute to the management of biodiversity. This research aims to identify impacts, trade-offs and influencing factors that affect biodiversity, livestock productivity and environmental efficiency relating to biodiversity. Various econometric estimation techniques are used to find appropriate management solutions for biodiversity and livestock production. In what follows a brief outline of each chapter is provided. Chapter 2 determines factors affecting land abandonment. It examines the effects of different livestock grazing management on land abandonment amongst farms that manage commonage in the west of Ireland. It has been suggested that off-farm employment has played an important role in maintaining farmers in the Republic of Ireland (RoI). However, this results in farmers having less time to devote to farming activities and environmental stewardship; traditional practices such as mixed grazing, haymaking and commonage that frequently yield important public good benefits such as the provision biodiversity and landscape amenity may be abandoned. An ordered probit model is used to explain the probability of land abandonment. The results show that on-farm labour, livestock income and agri-environment scheme payments are found to reduce land abandonment whereas off-farm income, livestock costs and farmer age increases land abandonment. The risk of land abandonment is more likely to occur in suckler beef enterprises and least likely with mixed grazing. Findings indicate that mixed livestock systems may play an important role in preventing abandonment of commonage lands or by restoring damaged commonage lands in the Irish uplands. Chapter 3 investigates the impact of habitat fragmentation on biodiversity and livestock productivity in the west of Ireland. This study uses a two-stage regression estimation procedure to estimate the relationship between biodiversity and livestock productivity. In the first stage, a Cob Douglas production function is used to investigate the impact of habitat fragmentation on biodiversity. In the second stage, a livestock production function is used to analyse the effects of habitat fragmentation on livestock productivity. The results show that habitat fragmentation is negatively correlated with biodiversity and livestock productivity. A specialisation in livestock grazing management has accelerated habitat loss and reduced biodiversity. On commonage lands, subsidies have positively influenced biodiversity in sheep farming whereas subsidies have no impact on biodiversity in mixed farming. In private lands, the results indicate slightly different findings. Subsidies are significantly and positively correlated with biodiversity in suckler beef and mixed farming. Empirical evidence suggests that a mixed grazing method was found to be the best management practice to improve biodiversity and livestock productivity. Mixed grazing management is found to be less vulnerable to habitat fragmentation and provides the highest total returns to livestock production compared to specialized livestock grazing management. It is, therefore, recommended that mixed livestock grazing should be better integrated into agri-environmental schemes such as the Rural Environment protection scheme (REPs) to conserve biodiversity and maintain productivity particularly for commonage. Chapter 4 considers to what degree efforts to enhance farm profitability compromises biodiversity conservation goals amongst livestock farmers in the west of Ireland. This paper aims to deliver empirical evidence on the links between environmental efficiency, biodiversity, and livestock management by analysing commonage farms in Ireland. The relationship between profit efficiency and Environmental Efficiency (EE) is examined comparing specialised versus mixed grazing farms; private versus commonage farmers; and full time versus part time farmers. A three-stage estimation procedure is employed. First, a stochastic biodiversity frontier function is used to estimate environmental efficiency. Second, a fixed effect stochastic profit frontier model is used to estimate profit efficiency. Finally, a truncated model is applied to estimate factors affecting the variation in environmental efficiency. The findings indicate that there is an inverse relationship between EE and profit. On commonage, there is a positive relationship between EE and stocking rate. Profitability and family labour have a negative impact on EE on private farms. On mixed farms, purchased feed decreases EE. However, stocking rate and the number of plots (land fragmentation) plays a positive role on EE. On specialised farms, environmental efficiency is negatively correlated with livestock profit, stocking rate, family labour, and subsidies whereas in mixed livestock farms environmental efficiency is negatively correlated with only purchased feed. However, there is no significant difference in EE between full-time and part-time farming.