Sustainable agriculture: Incentivise ecosystem services


Ever since the beginning of the Green Revolution in the mid-1960s, India has been supporting its farmers through input subsidies and minimum support prices of important crops, that have immensely contributed to increases in agricultural productivity, farm incomes and food supplies.

But many critics argue that the current subsidy system is creating environmental problems and that it is mostly the large farmers who cultivate paddy and wheat who benefit more from farm subsidies. Moreover, India’s farm subsidies have come under the scrutiny of the World Trade Organisation (WTO) for these being in excess of the permissible limit. 

The political economy of farm subsidies is complex, and once provided, it is difficult to withdraw these subsidies, so it is necessary to develop an incentive structure that can minimize the trade-off between efficiency and sustainability of agricultural production systems. A possible mechanism could be to incentivize farmers for the ecosystem services they provide to society through agriculture, defined by the Millennium Ecosystem Assessment (MEA) as “the benefits that humans obtain from ecosystems”, corresponding to 4 categories that are: Supply, Support, Regulation, Culture.

Except for provisioning services, the other services that agriculture provides are non-tradable, and their contributions have remained unvalued. Supporting and regulating agricultural practices that provide these ecosystem services is essential to the sustainable development of agriculture. 

Farmers in fact provide non-marketable ecosystem services that are public goods and are available to society at no cost. Compensating farmers for these services will encourage them to adopt practices that optimize the use of various environmental inputs and reduce the cost of production. 

However, monetization of ecosystem services currently remains a challenge due to the lack of scientific evidence on the biophysical parameters needed to value them, which if generated make it possible to transform agricultural subsidies into an economic “payment for ecosystem services” package. 

For further information visit: