Full Cost Accounting for Agriculture – Year 2 Report

This report, prepared by the International Institute for Sustainable Development (IISD) for Agriculture and Agri-Food Canada (AAFC), develops a conceptual methodology called the 'Impact Pathway approach' to value changes in agri-environmental indicators. The report tests this methodology on five specific indicators: Risk of Water Erosion, Risk of Water Contamination by Phosphorus, GHG Emissions, Energy Use Efficiency, and Wildlife Habitat Availability. It identifies critical data gaps, particularly in transport modelling for water-related indicators, and explores linkages between these valuations and integrated economic-environmental modelling and social indicators.

• The 'Impact Pathway' approach consists of four stages: a Pathway Constituent Model to identify pollutants and routes; a Transport Model to determine how constituents disperse; an Impact Model to relate concentrations to environmental or human wellbeing effects; and a Valuation Model to determine associated costs.
• Valuing changes in the Risk of Water Erosion indicator requires a transport model to convert farmland soil loss into sediment and turbidity changes in waterways. Pathway constituents include sediment loading, soil productivity loss, and phosphorus and nitrogen loading.
• The Risk of Water Contamination by Phosphorus indicator currently measures pollution risk rather than actual phosphorus loading, creating a gap in the transport model necessary for ecosystem impact estimates. Research is ongoing in Quebec and Manitoba to correlate the indicator with water quality.
• Valuation of the Availability of Wildlife Habitat on Farmland indicator is most sensitive to changes in wetlands and woodlots, but these cannot be determined using the current indicator due to data gaps in the Census of Agriculture.
• While GHG Emissions valuation lacks methodological gaps, the valuation of human mortality on a global scale is highly problematic and contentious, leading the IPCC to avoid comprehensive global valuation of climate change damages.
• The Energy Efficiency indicator is the only one studied that deals with inputs. A life cycle approach is required to value the impacts of energy production and delivery (e.g., liquid fuels, electricity, fertilizer) before the energy reaches the farm, which is a complex and time-consuming analysis.
• The report suggests that the watershed or water basin is a critical unit of analysis for valuing soil and water quality indicators, as seen in studies of the Grand River Basin in Ontario and the Conservation Reserve Program in the US.
• The Land Use Allocation Model (LUAM) is identified as a promising channel to link macro-level policy changes simulated by the Canadian Regional Agricultural Model (CRAM) with changes in agri-environmental indicators at the SLC polygon or watershed level.
• Benefit transfer is common in Canadian valuation exercises, particularly for water erosion and habitat changes, but often relies on a small subset of primary data sources and may omit original assumptions, affecting credibility.

APA

Barg, S., Swanson, D., Venema, H. D., & Salvano, E. (2005). Full Cost Accounting for Agriculture – Year 2 Report. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/measure_valuing_changes.pdf

Chicago

Barg, Stephan, Darren Swanson, Henry David Venema, and Esther Salvano. Full Cost Accounting for Agriculture – Year 2 Report. International Institute for Sustainable Development, 2005. https://www.iisd.org/system/files/publications/measure_valuing_changes.pdf.

Wikipedia

{{cite report |last1=Barg |first1=Stephan |last2=Swanson |first2=Darren |last3=Venema |first3=Henry David |last4=Salvano |first4=Esther |title=Full Cost Accounting for Agriculture – Year 2 Report |publisher=International Institute for Sustainable Development |date=June 2005 |url=https://www.iisd.org/system/files/publications/measure_valuing_changes.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{barg2005full, author = {Barg, Stephan and Swanson, Darren and Venema, Henry David and Salvano, Esther}, title = {{Full Cost Accounting for Agriculture – Year 2 Report}}, institution = {International Institute for Sustainable Development}, year = {2005}, month = jun, url = {https://www.iisd.org/system/files/publications/measure_valuing_changes.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }