Whole system valuation of arable, agroforestry and tree-only systems at three case study sites in Europe

There is an increasing demand to study the long-term effects of land use from both local farm and wider societal and environmental perspectives. This study applied an approach to evaluate both the financial profitability of arable, agroforestry, and tree-only systems and the wider societal benefits over a period of 30-60 years. The biophysical inputs and yields from the three systems were modelled for three case study sites in the United Kingdom, Spain, and Switzerland, using a tree and crop simulation model called Yield-SAFE. A bio-economic model called Farm-SAFE was then used to compare the financial (EAVF) and economic (or societal) equivalent annual values (EAVE) by including monetary values for five environmental externalities: carbon dioxide emissions, carbon sequestration, soil erosion by water, and nitrogen and phosphorus balances. Across the three case studies, arable farming generated higher farm incomes than the agroforestry or tree-only systems, but the arable systems also created the greatest environmental costs. By comparison the agroforestry and tree-only systems generated lower CO₂ emissions and sequestered more carbon. Applying monetary values to the environmental externalities meant that the EAVE of the agroforestry and tree-only systems were greater or similar to that for the arable system in the UK case study. In Spain, the slow predicted growth of the trees meant that, even after including the environmental externalities, the arable system created greater societal benefit than the agroforestry and tree-only systems. In Switzerland, including the environmental externalities increased the attraction of the tree-only system, but the high subsidies for arable and agroforestry systems meant that the EAVE for the agroforestry and arable systems were the most attractive from a farmer’s perspective. A breakeven analysis was used to determine the environmental externality values at which the agroforestry and tree-only systems produced the same societal return as the arable system in each case study. In the UK, a carbon price of ₠16 (t CO₂)⁻¹ allowed the EAVE of the agroforestry system to attain parity with the arable EAVE. In both the UK and Spain, an environmental nitrogen cost of ₠3-6 (kg N)⁻¹ was sufficient for the EAVE of the agroforestry and tree-only systems to match those of arable farming. Because trees on farms provide ‘‘economies of multifunction’’ for environmental benefits, the breakeven values will be less if environmental benefits are considered together as packages. The described approach provides a method for governments and others to examine the cost effectiveness of new agri-environment measures.