“Money drives change…you can’t be in the red if you want to be green.” This was the short and simple message of investor and philanthropist Robert Appleby from ADM Capital, delivered in the closing session of the Sustainable Food Trust’s conference Farming and Climate Change: Towards Net Zero Emissions. The need for change in agriculture is obvious: the carbon footprint of industrial agriculture is huge because it is dependent on fossil fuels – from fertiliser production to running big machinery. Because the UK government has set a legally binding target of net zero carbon by 2050 a lot of changes will have to be implemented. Climate-adapted farming and agroecological agriculture are definitely part of the solution – the question is: will sustainable farming be financially viable? If it isn’t, farmers simply cannot and will not adopt the practices that are vital for the reduction of greenhouse gas (GHG) emissions.
Former Secretary of State for Environment, Food and Rural Affairs, Michael Gove, seized on the opportunity that Brexit has thrown up: once Britain leaves the UK, British farmers will no longer receive subsidy payments under the Common Agricultural Policy (CAP) and that gives us in the UK, the chance to redefine who in future will receive payments and for what. With the headline ‘public money for public goods’, Michael Gove has indicated the path forward. “That is a huge policy change,” said Tony Juniper, Chair of Natural England, at the conference. Together with a host of other organisations, Natural England is helping to shape the notion of what will be considered ‘public goods’. Nature is a public good, argues Juniper, nature is natural capital; economic values and price tags can be attached to nature’s assets – from clean air and water to carbon and biodiversity.
Dieter Helm is the Chair of the Natural Capital Committee and Professor of Economic Policy at Oxford. Looking at production, assessing costs and benefits, is what he does. Helm, too, sees tremendous opportunities in a new agricultural policy which (to him) could amount to a revolution: Britain could go from “a broken system”, fuelled by the wrong incentives, to one that delivers biodiversity, carbon sequestration, healthy food and income for farmers.
“Natural capital is the ultimate public good,” Helm stated at the conference. At present farmers receive about £3 billion in subsidies through the EU and CAP. Helm is not optimistic that any UK government will in the long run pay the same amount to farmers for delivering ‘public goods’. It is easy to see that there will be stiff competition for limited Treasury funds – farmers would be up against the NHS, schools, the elderly… But if the system were set up and designed correctly it could provide the money needed to deliver public goods, says Helm. In his book Green and Prosperous Land, he lays out what he calls a “blueprint for rescuing the British countryside”.
What would it take? First of all, Helm argues, we would need to take all costs of production into account. Agricultural run-off pollutes water sources and water companies have to spend a lot of money on cleaning it up, costs that are passed onto the consumer. The production of fertiliser is very energy intensive and causes GHG emissions. There are economic, environmental and health costs embedded in the use of herbicides and pesticides. And we need to think globally and include the cost of imported goods. Food prices need to go up, Helm asserts in Green and Prosperous Land. “It is us, consumers, who buy these pollution-inducing agricultural products and are therefore really the polluters, who should pay for the damage our consumption habits cause. It is ultimately our fault, not that of the farmers, who respond rationally to the incentives they face. Cheap food cannot be an objective without regard to the consequences.” Higher food prices, of course, would have a negative impact on food security for people and families on low incomes – so this is a contentious issue. Everyone should have a right to access good quality, healthy food at an affordable price.
Advances in technology are making it easier to measure pollution, says Helm, but there needs to be stringent controls, and the payment of costs and fines has to be enforced. It is critical that the UK enshrines the ‘polluter pays’ principle into UK law in order to address the damage. If farmers had to pay to use agrichemicals, the additional cost would be a strong incentive to reduce inputs or go organic. Farmers would also have to give up some privileges – like red diesel which is currently subsidised. It doesn’t make sense to reward farmers for carbon sequestration and at the same time incentivise them to use more fuel because it’s cheap.
For Helm, it’s not only about taking all environmental cost into account and making polluters pay, but about a ‘net gain’. He further states in his book “There should be compensation, offsetting any damage. But the net gain principle goes further: it states that we should be risk-averse and err on the side of overcompensation. It incorporates the precautionary principle, especially where renewable natural capital is involved and when we don’t know precisely where the safe limits lie.”
In his presentation at the conference, Helm focussed on agriculture, but his ‘blueprint’ goes beyond this: he looks at river systems, coastlines and marshland, the uplands, towns and cities. The same principles should apply everywhere. When environmental costs are incurred, they must be offset with a net environmental gain: if houses need to be built and land is paved over, there must be compensation elsewhere. And Helm defines pollution in the widest possible sense: “Imagine if GlaxoSmithKline were liable for the environmental damage caused by its products. Imagine if Unilever were responsible for the disposal of all its beauty and personal hygiene products…They would have a direct incentive to minimise the risks.”
Dieter Helms’s logic is impeccable, his enthusiasm for far reaching changes is infectious. It can be done, he says. The Government’s 25 year Environment Plan sets out the goals – and they need to be enshrined into law. The Agricultural Bill could be a framework for incentivising environmentally sensitive agriculture practices. Planning orders can guarantee the principle of net environmental gain. Credible new institutions could coordinate and enforce the plans. “It’s a one in 50-year chance,” says Helm who is not naïve enough to think that achieving such goals is anything short of an enormous challenge. A lot of money is at stake, and there are many vested interests. It will take time, a lot of work and new trading arrangements with the EU and the rest of the world, Helm says. But even for the optimistic economist there is a caveat: a hard Brexit – the probability of which has just increased with the election of Boris Johnson as prime minister – resulting in massive tariffs would scupper the chances for a green and prosperous Britain.
The economic model Helm proposes simply would not work in the event of a hard Brexit. Under any circumstances, the stars would have to align perfectly and in record time to push through the legislation needed. In the current political climate, it is hard to see how tackling it would become a priority. The best hope might be that ‘the polluter pays’ principle becomes more widely accepted and we all begin to pay more attention as to who pollutes. Making them pay might be difficult, but we can reduce their profits. Making the right choices as consumers might be a good start.
Sign up to our Newsletter
Stay up to date with the latest SFT views and news