Agricultural Land Use and Ecosystem Services in the Canadian Prairies

1. Agricultural Land Use and Ecosystem Services in the Canadian Prairies Benjamin S. Rashford Agricultural and Applied Economics University of Wyoming

2. What are Ecosystem Services? Many things to many people… “…the condition and processes through which natural ecosystems, and the species that make them up, sustain and fulfill human life (Daly, 1994)”

3. Ecosystem Services and Agriculture Agriculture and ecosystem services are largely interrelated. Agro-ecosystems  generate beneficial ecosystem services  receive services from non-ag systems  services from non-ag systems are impacted by agricultural practices

4. Ecosystem Services and Agriculture climate regulation…soil provision…pollination…genetic diversity…pest regulation… Services produced Services consumed food & fiber…scenery… recreation…biodiversity…carbon sequestration…

5. Importance of Agricultural Lands for Ecosystem Service Provision Agro-ecosystems are critical to the future provision of ecosystem services because: • Abundant (30-50% of earths land cover) • Knowledge of biophysical processes • Experience managing ecosystem services • Experience with incentive programs

6. Agricultural Land Use Change and Ecosystem Services Changes in management practices Changes in agricultural uses Conversion to non–ag. uses

7. Agricultural Land Use in the Canadian PrairiesHistorical Trends - 0.3% + 1.4% Total Farm Area + 1.3%

8. Agricultural Land Use in the Canadian PrairiesHistorical Trends Acres by Ag. Use – Saskatchewan - 31% + 3% + 22% + 342% + 195% + 483%

9. Output prices Input costs Land quality Gov’t policy Regional factors Agricultural Land Use in the Canadian PrairiesLand Use Modeling - Overview Theory – landowners’ choose the use that maximizes net returns to land Share of land in each use

10. Output prices Input costs Land quality Gov’t policy Regional factors Agricultural Land Use in the Canadian PrairiesLand Use Modeling - Data Share of land by Census Agricultural Region (CAR) in: Spring wheat Oats & barley Canola & flaxseed Winter wheat & fall rye Hay Pasture Manitoba, Alberta, Saskatchewan Share of land in each use (1981-2006)

11. Output prices Input costs Land quality Gov’t policy Regional factors Agricultural Land Use in the Canadian PrairiesLand Use Modeling - Data Share of land in each use Output price by use (real $CN / metric tonne) Expected price = two-year moving average Expected yield = five-year Olympic average

12. Output prices Land quality Gov’t policy Input costs Regional factors Agricultural Land Use in the Canadian PrairiesLand Use Modeling - Data Input price index __________________ Output price index “Terms of trade” = Share of land in each use

13. Input costs Output prices Gov’t policy Land quality Regional factors Agricultural Land Use in the Canadian PrairiesLand Use Modeling - Data Proportion of land in each CAR in: - Soil Capability Class 1 & 2 - Soil Capability Class 3 & 4 - Soil Capability Class 5 & 6 Share of land in each use

14. Land quality Input costs Output prices Gov’t policy Regional factors Agricultural Land Use in the Canadian PrairiesLand Use Modeling - Data Harvest Probability - probability that spring crop is harvested in time to plant fall crop Shipping Distance - minimum distance to nearest major processing/exporting center Population Density - population density in each CAR Share of land in each use

15. Land quality Input costs Output prices Gov’t policy Regional factors Agricultural Land Use in the Canadian PrairiesLand Use Modeling - Data Share of land in each use Could not be used due to five year increments in Census data

16. Agricultural Land Use in the Canadian PrairiesLand Use Modeling - Data Expected prices Expected yields Input prices Soil Quality Harvest probability Shipping distance Population density Share of land in each use = function of

17. Land Use Share Actual Predicted Regions (CARs) Agricultural Land Use in the Canadian PrairiesLand Use Modeling – Model Results Model performance: Predicts well – predicted shares are close to the observed shares

18. Share of use i Price Yield of use i Share of use i Price Yield of use j Agricultural Land Use in the Canadian PrairiesLand Use Modeling – Model Results Determinants of Land Use Expected prices Expected yields Input prices Soil Quality Harvest probability Shipping distance Population density

19. 0.04% increase in pasture share of land 1% increase in livestock price 2.2% increase in winter wheat share of land 1% increase in winter wheat price Agricultural Land Use in the Canadian PrairiesLand Use Modeling – Model Results Determinants of Land Use Expected prices Expected yields Input prices Soil Quality Harvest probability Shipping distance Population density Crops are mores sensitive to price changes than hay and pasture

20. Share of use i Input Price of use i Agricultural Land Use in the Canadian PrairiesLand Use Modeling – Model Results Determinants of Land Use Expected prices Expected yields Input prices Soil Quality Harvest probability Shipping distance Population density

21. High shares of grains and oilseeds High proportions of soil class a 1 & 2 Agricultural Land Use in the Canadian PrairiesLand Use Modeling – Model Results Determinants of Land Use Expected prices Expected yields Input prices Soil Quality Harvest probability Shipping distance Population density

22. High harvest probability High shares of fall grains Agricultural Land Use in the Canadian PrairiesLand Use Modeling – Model Results Determinants of Land Use Expected prices Expected yields Input prices Soil Quality Harvest probability Shipping distance Population density

23. Long shipping distance High population density Lower shares in all uses Lower shares in all uses Agricultural Land Use in the Canadian PrairiesLand Use Modeling – Model Results Determinants of Land Use Expected prices Expected yields Input prices Soil Quality Harvest probability Shipping distance Population density

24. Predicted Land Use Change - Saskatchewan Land Use Baseline 2006 Acreage Predicted 2011 Acreage Absolute Change Percent Change Spring Wheat 12,799,573 19,782,510 6,982,937 54.6 Oats & Barley 5,839,301 4,727,722 -1,111,579 -19.0 Canola 5,977,272 5,037,047 -940,225 -15.7 Flaxseed 1,544,879 449,374 -1,095,505 -70.9 Winter Wheat 236,762 122,739 -114,023 -48.2 Fall Rye 214,175 186,140 -28,035 -13.1 Pasture 17,638,413 17,333,814 -304,599 -1.7 Hay 5,152,101 5,236,414 84,313 1.6 Total 49,402,476 52,875,760 3,473,284 7.0 Agricultural Land Use in the Canadian PrairiesLand Use Modeling – Model Results Predicting Future Land Use – Ecosystem Services (?)

25. Agricultural Land Use in the Canadian PrairiesLand Use Modeling – Model Results Decrease in wildlife habitat & carbon sequestration; Increases in erosion & pesticide run-off Pasture Spring Wheat Oats & Barley Hay Canola Flaxseed Decrease in waterfowl nesting habitat Winter wheat Fall Rye

26. Target areas with high conversion rates and large waterfowl populations Agricultural Land Use in the Canadian PrairiesLand Use Modeling – Model Results Predicting Future Land Use – Spatial Targeting

27. Agricultural Land Use in the Canadian PrairiesLand Use Modeling – Model Results Predicting the Effects of Payment Programs Predicted changes in winter wheat with a $10/acre incentive payment

28. Agricultural Land Use in the Canadian PrairiesSummary and Conclusions Agricultural land is critical to the future provision of ecosystem services - farmers and ranchers will continue to be the primary stewards and producers of these services; Understanding the determinants of agricultural land use decisions will allow us to better target and protect ecosystem services and; Will allow to efficiently compensate farmers and ranchers for their management of the ecosystem services society demands