Pricing of ecosystem services in agriculture : a basis of crop insurance

The book deals with the pricing of ecosystem services provided by agriculture. All provisioning, regulating, supporting and cultural services are being covered in this title. Chapters in this contributed volume cover topics such as pricing of services from the soil, water, and nutrient management. Quantified monetary values of carbon sequestration and renewable energy applications in agriculture are covered with clear-cut methodologies. This book also links ecosystem service-based pricing with crop insurance. Improving the farmers’ livelihood is the central goal of the agricultural production system throughout the world. Under the climate change context, farms’ produce is now climate-vulnerable and heavily dependent on weather conditions. Moreover, we often neglect the contribution of several positive impacts of agricultural practices on ecosystems and natural resources. Therefore, there is a need to quantify and value these ecosystem services in agriculture. However, valuation and pricing the services in agriculture both tangible and intangible is a challenge. It is necessary to have clear-cut methodologies for pricing ecosystem services of agriculture in terms of net monetary benefits. The ecosystem service-based pricing could be a solid basis for calculating the insurance to farmers in case of occurrence of natural hazard and associated crop damage. This book is of interest to scholars, teachers, researchers, environmental scientists, watershed managers, capacity builders, and policymakers. The book also serves as effective reading material for undergraduate and graduate students of agriculture economics, ecology, agronomy, and environmental sciences. National and international agricultural scientists, policymakers will also find this to be useful. Foreword 5 Preface 7 Contents 10 About the Authors 12 Abbreviations 14 1: Concept and Approaches of Ecosystem Services in Agriculture 17 1.1 About Ecosystem Services 17 1.2 Importance of Ecosystem Services in Agriculture 19 1.3 Value of Soil and Water Resources and Ecosystem Service Delivery 21 1.3.1 The Dilemma 22 1.3.2 Valuation of Soil Ecosystem Services 23 1.4 Payments Need of Ecosystem Services 24 1.4.1 Specific Needs of Payments of ESs in Agriculture 25 1.5 Challenges of Pricing/Valuation of Ecosystem Services 25 1.5.1 Double Counting of ESs in Agriculture 26 1.5.2 Disservices in Agriculture 27 1.6 Messages 28 References 29 2: Pricing of Agricultural Products, Soil and Water Management 33 2.1 General Methods of Pricing Ecosystem Services in Agriculture 33 2.2 Pricing of Agricultural Products 34 2.3 Valuation of Soil Nutrient Management in Agriculture 34 2.3.1 Pricing of Nutrient Build-Up 34 2.3.1.1 Valuation of Soil Nutrients Mineralized 34 2.3.1.2 Pricing of Nitrogen Fixation 35 2.3.1.3 Methodologies for Pricing Nitrogen Transformation 35 2.3.2 Pricing of Soil Fertility 36 2.4 Pricing of Ecosystem Services in Amelioration of Problem Soils 37 2.5 Valuation of Water Management in Agriculture 39 2.5.1 Flood Control and Water Regulation 42 2.6 Future Road Map 42 2.6.1 Option of Markets for Ecosystem Services in Agriculture 42 2.7 Messages 44 References 44 3: Pricing of Soil and Water Conservation in Agriculture 46 3.1 Pricing of Soil Erosion Control, and Soil Build-Up 46 3.2 Pricing the Ecosystem Benefits of Soil Conservation Measures 48 3.3 Case Studies in Hill and Mountain Ecosystems of India 56 3.3.1 Western Himalayan Region 56 3.3.2 Eastern Himalayan Region 57 3.3.3 Cost of Ecosystem Services (ES) in Hill and Mountain Ecosystem 58 3.4 Valuation of Participatory Watershed Management with Case Studies 63 3.4.1 A Case Study on the Pricing of `Participatory Watershed Management ́ in Hill and Mountain Region in Himalayas, India 63 3.4.2 Observation Recorded and Data Collected of Pricing of ES of Integrated Watershed Management Project 65 3.4.3 Ecosystem Disservices 68 3.5 Future Road Map 69 3.6 Messages 70 References 71 4: Pricing of Carbon Sequestration and Environmental Regulation 74 4.1 Pricing of Carbon Sequestration and GHGs Emission Mitigation 74 4.1.1 Carbon Sink in Wetlands 76 4.1.1.1 Rice Paddy Systems 76 4.1.1.2 Models and Toolkit for Pricing of ESs in Wetlands 79 4.1.1.3 Peatland and Sea Grass 79 4.1.1.4 Rainwater Harvesting Ponds 80 4.1.2 Carbon Sequestration in Agroforestry, Silviculture and Horticulture 81 4.1.3 Gas Regulation and GHGs Emissions 83 4.2 Pricing of Bioremediation for Pest and Pollution Control 84 4.2.1 Pricing of Biological Control of Pests 86 4.3 Pricing of Waste water Utilization in Agriculture 86 4.4 Valuation of Residue and Its Management Options 87 4.4.1 Challenges and Potential of Crop Residue Management 87 4.4.2 Pricing of Alternative Options of Residue Management 88 4.5 Future Road Map 91 4.5.1 Cooperative Approach for Valuation of Ecosystem Services in Agriculture 91 4.6 Messages 92 4.6.1 Research Needs for Pricing Ecosystem Services in Agriculture 92 References 93 5: Pricing of Renewable Energy-Based Applications in Agriculture 97 5.1 An Overview of Renewable Energy Applications in Agriculture 97 5.2 Ecosystem Services of Solar Energy-Based Applications 101 5.2.1 Solar Thermal Devices 105 5.2.1.1 Solar Dryer 105 5.2.1.2 Animal Feed Solar Cooker 107 5.2.1.3 Solar Cooker 107 5.2.2 Solar Photovoltaic Applications 108 5.2.2.1 Solar PV Pumping System 108 5.2.2.2 Solar PV Sprayer/Duster 110 5.2.3 Agrivoltaic System 111 5.3 Ecosystem Services of Wind Energy Applications 116 5.4 Ecosystem Services of Biomass-Based Energy Generation 118 5.4.1 Biogas Generation and Ecosystem Services 118 5.5 Future Road Map 119 5.6 Messages 120 References 120 6: Crop Insurance Based on Payment of Ecosystem Services 123 6.1 About Crop Insurance 123 6.2 Evolution of Crop Insurance Schemes in India 124 6.3 Weather-Based Crop Insurance Scheme (WBCIS) 126 6.3.1 Features and Design of Weather Index 126 6.3.2 Crops Covered and Premium Under WBCIS 127 6.4 `Prime Minister Crop Insurance Scheme, India (Pradhan Mantri Fasal Bima Yojana, India): One Nation-One Scheme theme ́ 129 6.5 Technology-Based Crop Insurance in Agriculture 129 6.5.1 Need and Choices of Technology Adoption in Crop Insurance 129 6.5.2 Technology Enablers and Use Cases 132 6.5.3 Institutional Mechanisms for Technology Use in Crop Insurance 134 6.5.4 Using Digital Technology: Demand for Image-Based Crop Insurance 134 6.5.5 Crop Insurance: Improving Business Value Using Technology Interventions 135 6.6 The Problem of Insurance Demand 135 6.7 Challenges and Opportunities of Crop Insurance (Subsidies, Incentives, etc.) 136 6.8 Gaps in Delivery Mechanism of Major Crop Insurance Schemes and Correcting Imbalances 138 6.9 Linkage of Payment to Ecosystem Services (PES) and Crop Insurance 140 6.9.1 Ecosystem Services: The Concept 140 6.9.2 Incentives for Ecosystem Services and Quantification of Its Influence 140 6.9.3 Payment to Ecosystem Services and Its Working Principle 142 6.9.4 Valuing Ecosystem Services: The Social Component 144 6.9.5 Payment to Individual Farm at Equilibrium 144 6.9.6 Incentives, Land Use, and Ecosystem Services: Synthesizing Complex Linkages 145 6.10 Policy-Finance-Technology Amalgamation for Crop Insurance 146 6.10.1 Policy Issues in Implementing WBCIS 146 6.10.1.1 Lack of Information 146 6.10.1.2 Enrolment Issues 146 6.10.1.3 Affordability 147 6.10.1.4 Coverage 147 6.10.1.5 Product Design 147 6.10.1.6 Claim Settlements 147 6.10.1.7 Infrastructure 147 6.10.2 Valuation of Environmental Impacts and Payments for Ecosystem Services in Policy Appraisal 147 6.11 Future Road Map 148 6.11.1 Opportunities 148 6.11.2 Customization of Insurance Products by Region Based on Real-Time Data 149 6.11.3 Need for a Nationally Consistent Database 149 6.11.4 An Emerging Alternative 150 6.12 Messages 151 References 152 Glossary 156