Full Cost Accounting for Agriculture – Year 2 Report

The report establishes a four-stage 'Impact Pathway' approach—comprising pathway constituent, transport, impact, and valuation models—to quantify environmental externalities in Canadian agriculture. Testing this framework on five indicators (water erosion, phosphorus contamination, GHG emissions, energy efficiency, and wildlife habitat) reveals that while valuation methods are generally well-established, significant data and methodological gaps exist in 'transport modelling' for water-related indicators. The report suggests that watershed-level analysis is the most effective unit for these valuations and proposes integrating these findings into macro-level economic models like CRAM and LUAM.

• The 'Impact Pathway' approach consists of four distinct stages: the Pathway Constituent Model (identifying pollutants and routes), the Transport Model (how constituents disperse), the Impact Model (relating concentrations to environmental/human wellbeing effects), and the Valuation Model (determining associated costs).
• For the Risk of Water Erosion indicator, a transport model is required to convert soil loss from farmland into changes in sediment and turbidity in waterways before valuation can occur.
• The Risk of Water Contamination by Phosphorus indicator currently measures risk rather than actual phosphorus loading, creating a gap in the transport model that prevents direct economic analysis.
• Valuation of the Availability of Wildlife Habitat on Farmland indicator is hindered by a data gap in the Census of Agriculture, which does not provide specific areas for wetlands and woodlots, despite these being the most influential habitat types.
• While GHG emissions valuation is methodologically possible, the valuation of human mortality on a global scale is a contentious issue that the IPCC currently avoids.
• The Energy Efficiency indicator is the only one of the five studied that focuses on inputs, requiring a complex life cycle approach to account for environmental costs at all stages before energy reaches the farm.
• Benefit transfer—using valuation data from one study in a similar situation—is common in Canadian exercises, but the lack of primary data and the omission of original assumptions during transfer can undermine the credibility of valuations.
• The watershed or water basin is identified as a critical unit of analysis for valuing soil and water quality indicators, as seen in studies of the Grand River Basin and the U.S. Conservation Reserve Program.
• The Land Use Allocation Model (LUAM) is proposed as a way to link macro-level policy changes from the Canadian Regional Agricultural Model (CRAM) to changes in agri-environmental indicators at the SLC polygon or watershed level.
• An ecosystem services and human wellbeing framework, adapted from the Millennium Ecosystem Assessment, proved robust in brainstorming and identifying detailed impact pathways that might otherwise be overlooked.

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} }