Research / Mitigating and Compensating Agricultural Land-Use Externalities in British Columbia

Mitigating and Compensating Agricultural Land-Use Externalities in British Columbia

Researchers: G. C. van Kooten, University of Victoria

Research Summary

Canada’s agricultural land is under pressure at both the intensive (urban-rural) and extensive (agriculture-nature) margins. This is true even in British Columbia where agricultural land is protected under the Province’s 1973 Agricultural Land Reserve (ALR) legislation. At the urban-rural fringe, agricultural land has become fragmented with farmers unable to take advantage of economies of scale, and land prices have become inflated due to non-agricultural values, so farmers are unable to realize reasonable returns to land. Increasing pressure from urban encroachment results in externalities that are bi-directional. Urban complaints about off-farm spillovers such as smell, noise, and pollution of waterways necessitated ‘right-to-farm’ legislation – the BC Farm Practices Protection Act (1995) – that reduces the ability of urbanites to complain about agricultural practices, while requiring agricultural producers to employ ‘normal farming practice’. Despite this, farmers have difficulty moving equipment from one field to another and must tolerate trespass and vandalism associated with their proximity to urban development. The response to these spillovers has been threefold:
1. Landowners permit their stock of farm capital or farm improvements to deteriorate because they lack the incentive and finances to undertake new investments. In essence, farming is slowly being abandoned. Landowners may subdivide land to the smallest size permitted under the ALR zoning ordinance, selling the land much like single-family lots to those willing to treat it as a sub-urban ‘ranchette’. The land may be taken out of agricultural production entirely, and allowed to deteriorate, or rented out for livestock use or production of forages.
2. Agricultural producers switch to specialty ‘products’, including market garden crops that cater to the nearby urban market, organic production and/or very intensive agriculture (viz., greenhouses in Delta municipality). Farmers near urban centers may be able to command a price premium by producing organically or eliminate the marketing chain, thereby enabling them to earn an adequate income and continue farming.
3. Agriculture in the urban-rural fringe survives because off-farm income enables the farm household to maintain a standard of living not possible otherwise. Perhaps the farm operator works off the farm on a part-time basis and/or his/her spouse works off farm. Although an important source of farm produce, the farm enterprise is more like a hobby farm. The original landowners may have sold out to folks who are more interested in the lifestyle that (small-scale) farming offers.
At the extensive margin, agricultural land-use conflicts are the result of the interface between farming and wildlife. In some areas these conflicts take place near urban centers; in other areas wildlife nuisance reduces incomes of farmers who have fewer opportunities to supplement income with off-farm employment.
The proposed project will examine the effect of the ALR at the rural-urban fringe (intensive) margin, as well as economic instruments that encourage landowners to provide wildlife benefits as part of ongoing agricultural operations.

Significance of Research

The current research proposal addresses several objectives identified in the FLPN proposal, namely, (1) income stability/enhancement, (2) risk management, (3) environmental spillovers, and (4) social integration. As noted in the FLPN proposal, the Network will employ “a series of case studies of specific problems for different parts of Canada, analyzing the impact of specific regional and national policies on land use at both the extensive (agriculture-nature) margin and at the intensive margin or rural-urban fringe, including opportunities for providing nature and other services (e.g., recreational opportunities, open space), and farm profitability, competitiveness, risk and rural structure”. Information from this study will be useful to decision makers concerned with policies related to the preservation of farmland and open space around urban centres, and will be especially informative for Ontario, which has recently passed Greenbelt legislation to inhibit urban encroachment on farmland. Further, as noted, personnel in the BC Ministries of Water, Land and Air Protection, and Agriculture, Food and Fisheries, are keen on developing better economic instruments for protecting wildlife habitat on rural lands and/or compensating farmers for wildlife damage. This research will inform these decision making processes.

Summary of Research Results: Yet to come.