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Policy design

Sectoral and economy-wide policies affect livestock's relationship with the environment. Often, these effects are unintended because they were designed to address social and economic rather than environmental objectives (Munasinghe and Cruz, 1995). This effect is compounded by the complexity of livestock's interaction with the environment and the overall economy. However a few general principles can be established (Young, 1996):

• Mechanisms that address the underlying causes of environmental degradation are likely to be more effective than those that address the symptoms. When an underlying cause can be removed the incentive for managers to cause the problem disappears and little monitoring or enforcement is required.

• Instruments, mechanisms and policies need to be coordinated in order to maximize effectiveness and they must be adjusted over time according to circumstances. The heterogeneity in land-based livestock systems which operate in very different production environments, and the varying responsiveness of people to each instrument according to factors like relative wealth, age, family needs and status, necessitates a suite of instruments that will complement and enhance each other.

• Policies and programmes that have perverse or unintended effects on the environment should be replaced by those more precisely targeted to the prime policy objective. Thus, for example, tariff barriers to protect farmers' income and farming structure inside the European Union should be replaced with direct payment schemes that would avoid, for example, nitrate pollution of groundwater in the Netherlands or soil erosion in Thailand from where much cassava feed is imported. Wherever possible, mechanisms designed to achieve social or economic objectives should be decoupled from the processes that determine market prices.

The choice of policy instruments should take careful account of local institutions, infrastructure and levels of income. Where institutions are weak, and where the polluter is difficult to identify (non-point source pollution) regulations are difficult to enforce and more reliance has to be placed on market instruments. Regulations work best where the polluter or degrader can he unmistakably identified (point-source pollution) and where government has the financial resources to establish the infrastructure and where there are reliable institutions to enforce environmental regulations.

There is ample evidence that economy-wide policies, including fiscal and monetary policies or structural adjustment programmes, have strong positive as well ax negative impacts on the natural resource base. These complicated interactions are not well understood and generalizations are difficult to make. However, where market failures occur, or policy distortions and poverty cause environmental damage, broad policy reforms that promote efficiency or reduce poverty can generally be regarded as beneficial to the environment.

The objective e is not necessarily to modify the original broader policies which have conventional economic or social goals because this would be an unrealistic proposition, particularly for developing countries. Rather, complementary measures with specific or localized foci should be designed that help mitigate negative effects or enhance positive effects of the original policies on the environment (Munasinghe, 1994). The challenge is to design policies that correspond to the intended social and economic objectives but still comply with environmental sustainability. The current trend in the EU to direct income support rather than price support is one move in that direction.

Institutions

Institutions are required to develop environmental polices and laws and to assist line agencies to incorporate environmental concerns into economic development planning and budgeting. There must also be institutional capability to monitor compliance and enforce environmental regulations. institutions are essential in managing access to common property resources, such as grazing land or tropical rainforests, or to ensure security of tenure. The presence and performance of other institutions have a more indirect effect on the environment, such as those offering financial services, but are still very important in their impact on the environment.

For most traditional grazing systems under pressure by changing property rights, institutions need to be improved by decentralizing decision making. Local empowerment is required in all situations, but especially where governmental institutions are weak. The need to transfer authority and responsibility for resource management to the lowest level at which it can be exercised effectively is increasingly recognized. Often, consultation and direct participation of the community in decision-making enables local knowledge to be harnessed and for responsibility for identifying problems and finding solutions to he taken at local level. Institutions need to establish stewardship for environmental resources and to regulate access. This, in particular, refers to extensive systems where a large part of the environmental damage can be traced to a regulatory vacuum left by eroding traditional institutions.

Community-based wildlife management is becoming generally accepted as an essential component of sustainable wildlife management, and for managing livestock-wildlife interactions, in particular. There has been considerable progress in decentralizing wildlife management, especially in East Africa, and in sharing the benefits from wildlife with the involved population (Otichillo, 1996). Key issues still involve the strength and cohesion of the traditional social fabric. One example is the difference between the successful community management around the Maasai Mara park, and the less successful experience in Amboseli where traditional authority is much weaker (Kiss, 1992). An equitable distribution of revenues from wildlife among the local population is also difficult to achieve.

Property-right instruments have the potential to grant resource users a tangible interest in the environmental consequences of their actions (Young, 1996). Property-rights need to be enforced by governments and, in a subsidiary fashion by traditional institutions. Lack of security of tenure has often been identified as a prime cause of land degradation. In the Brazilian Amazon, for example, security of tenure has been conditional upon land clearance with the result that significant areas of rainforest have been cleared solely as a means to obtain access to wealth. Land tenure arrangements are a key factor in facilitating long term investment into sustainable resource use, for both grazing and mixed systems. Farmers will only accept or initiate such activities if they can expect to harvest the revenue on such investments.

Similarly, in many parts of Africa, effective common property regimes have broken down because governments have seen fit to allocate key grazing areas to people who wish to crop them. Pastoral systems have an overriding need for mobility over large areas and to maintain access to the key resources of dry season or mountain summer pastures. This need calls for the strengthening of traditional communal grazing rights, combined with enforcement and conflict resolution mechanisms, and decentralized decision making, both in public (government) and customary law. Empowering pastoral people will be the main challenge in future pastoral development. The development of local, regional and national herder organizations has been a major thrust of most donors in West and North Africa over the last decade. While there has been considerable progress in establishing viable organizations for the provision of services such as animal health and education, these organizations have been less successful in range management (Shanmugaratnam et al., 1992). The exception may be the Middle Atlas programme in Morocco funded by the World Bank where the principle of subsidiarity was applied. Lessons to he drawn from these experiences are the need to: (i) work, wherever and as early as possible, within the traditional social organization, (ii) assume a gradual transfer to pastoral groups, starting with services and progressively moving towards more demanding tasks, such as range management, and (iii) tailor the organization to the goals envisaged.

Government institutions must establish and enforce a regulatory framework for land protection or waste control, such as for industrial production systems or animal product processing units. To strengthen pollution control and enforcement mechanisms in the developing world will be an important future task. Depending on the scale of the problem, enforcement costs can be considerable.

The establishment of financial institutions may alleviate pressure on the environment where significant numbers of animals are kept primarily for investment purposes, such as by absentee herd owners in Africa or Latin America. Positive interest rates on safe deposits provide better investment alternatives if the primary purpose for keeping livestock is not production.

Incentive policies

Incentive policies rely on market forces. The more a production system is exposed to the market the more susceptible it will be to price changes. In particular, intensive production depends on inputs that contain a high component of natural resources often not reflected in their market price. These should be priced higher by abolishing subsidies or, in some situations, taxation. Examples include feed concentrates, fossil fuel, inorganic fertilizer, livestock products, land, mechanization and genetic material. This, in addition to a quantitative effect of reduced consumption, will induce a more efficient use of natural resources, with both environmental and economic gains. It will also favour a more even spatial distribution and promote land-based systems. Correspondingly, subsidies or tax relief can be provided where natural resources are saved or used wisely, such as through the use of renewable energy (methane) or protecting biodiversity. Essentially, the recommendation is for full cost recovery of the provision of all goods and services used by livestock producers, and also, those sectors that compete with the livestock sector for resources and markets.

To a varying extent, livestock producers in grazing systems need to market their produce and are thus susceptible to market stimuli. By introducing incentive policies, the system can be directed towards more sustainable resource use. For example, grazing pressure may be reduced by increasing the cost of rangeland grazing because the incentive will be to sell animals earlier than they would have been sold had it been possible to keep them for longer at little extra cost. Incentive policies which reduce grazing pressures are:

• Full cost recovery, especially for water and animal health services would provide an incentive for rapid destocking of pastoral areas when feed resources are in decline, and would encourage more efficient use. Water has been, in many places, a free good supplied publicly. Full cost recovery, including construction costs, would reduce the number of large boreholes, and therefore reduce local degradation around these water points.

• Levying grazing fees for communal areas could be another step to reduce grazing pressure, and has been frequently proposed. The introduction of such fees requires institutional capabilities as well as the political will to tackle the issue of fairness, with owners of larger herds paying more on a per head basis (Narjisse, 1996). Because of these problems, very little long-term experience of such fee structures exists. The use of fees is a critical issue; ideally they should go back to pastoralists for resource management.

• Appropriate benefit sharing systems may also be devised for the protection of biodiversity. Their importance for community-based combined livestock-wildlife management has been mentioned. At the national or regional level, a number of instruments have been developed over the last years, including debt for nature swaps or international tradable development rights. In the European Alps (Austria, Switzerland), farmers receive income support for landscape maintenance. At a global level, benefit sharing systems may he devised for the production of global commons. Brown et al., (1993) estimate the damage from a doubling of atmospheric carbon dioxide in terms of global warming at 1 percent of (dross World Product. Carbon dioxide sequestration would thus be equivalent to US$ 10 per ton of CO₂ trapped. This would mean that the improvement of South American savannas could be valued at US$ 500 per hectare. The key issue is how to fund and distribute such payments (de Haan et al., 1997)

• Taxation for pasture and crop land in rainforest areas to discourage conversion of forest to crop and pasture land is conceptually attractive. However, with poor, or even non-existing land registry services this will be very difficult to enforce in many rainforest areas.

If the full environmental benefits of mixed farming systems are to be achieved, feed, fertilizer and mechanization subsidies should be removed. Cheap feed favours the development of industrial production at the expense of home-grown feed whereas cheap mineral fertilizer and fuel place inputs from internal sources, such as manure and animal traction at a disadvantage. Removing or lowering subsidies on such items will promote a closer integration of crop and livestock systems in many parts of the world because it will increase competitiveness of on-farm products and services, such as animal draught, manure, crop byproducts and farm-grown feed. Lower subsidies may also reduce nutrient imports into surplus areas. Taxation of these inputs may be considered where their production and use have proven harmful to the environment.

For nutrient surplus reduction in mixed farming and industrial systems in surplus areas there are a variety of incentives or penalties. These include:

• removal of subsidies on, or taxation of, imported concentrate feed to reduce the significant nutrient transfer. This will increase the cost of feed concentrate intensive production and favor land-based systems over industrial systems. In a more indirect way, taxes on fossil fuel may have a similar effect by raising the cost of feed. Removing subsidies on concentrate feed and on inputs used for its production such as fertilizer, fuel and machinery encourages efficient resource use. The same holds true for the taxation of inorganic fertilizer, which would not only encourage its more efficient use but also promote the use of animal manure in mixed farming areas.

• incentives to achieve a more balanced distribution of crop and livestock activities. these include, taxes on manure surpluses or phosphate loads or systems of tradable manure quotas to limit the number of animals (Brandies et al., 1995). Marketable permits and pollution trading is based on the establishment of payment per unit of pollution or the use of pollution reduction credits.

• levies on waste discharge; In the United States, there are examples of water treatment utilities paying farmers to adopt low polluting management practices because this option is more cost-effective for them than upgrading their water treatment plant (USEPA, 1996).

• removal of import restrictions on materials (such as phosphate enzymes, and amino-acids) and equipment that improve feed efficiency. This could lead to lower waste loads through better feed conversion.

• subsidies for investment or running costs to improve the adoption of emission control technologies. An example is subsidies for constructing manure storage facilities, practiced in many EU countries. In the USA, cost-sharing and state revolving funds have been established for manure storage sheds and dead poultry composters. Another example is the adoption of methane recovering techniques from manure which is largely determined by the price and availability of other forms of energy. Some OECD member countries have started favouring the use of regenerative energy vis-à-vis fossil sources and have created price incentives accordingly.

Regulations

Regulations can also be used to promote more sustainable resource use by prescribing quantitative limits (of emissions or animal numbers or input use), technical methods and access to resources. A further regulatory instrument is zonation, to promote a more even spatial distribution of animal production. Deregulation through freer movement of germplasm internationally, while respecting intellectual property rights, may help foster biodiversity conservation.

For grazing systems in the humid and sub-humid zones, the establishment of protected areas for the preservation of biodiversity is often the only appropriate measure. With growing population pressure, this becomes increasingly difficult. Government agencies in the developing world are often too weak to enforce such restrictions. While effective protection of large areas may be difficult to implement under the prevailing situation of understaffed, under-paid and poorly motivated government staff, the areas most valuable in biodiversity can be set aside. Mechanisms to provide revenue sharing from the rainforest, which should be based on the participatory principle need to explored with a view to improving the incentives for forest conservation.

For intensive mixed farming systems and industrial systems, the control approach focuses on regulating manure management. It prescribes a number of technical solutions, including storage and application techniques, seasonal bans of manure application and maximum amounts of manure application or livestock units on farm. In addition, restrictions for sensitive areas are imposed. Some of these regulations are difficult to control and enforce, such as maximum amounts of manure applied per unit area, while others are more easily controlled like storage capacity and number of livestock per farm. An overview is given in Table 3.1. Enforcement of regulations within reasonable social cost remains a major challenge and limits the validity of this approach, particularly in countries with weak institutions. It is implied that compliance with regulations has differential impact on cost structure and thus affects regional distribution.

Regulations often aim to establish rational patterns of land use through zoning laws and should take into consideration, among other factors, the environmental value and susceptibility of an area. Zoning is an important current and future instrument for both animal manure and product processing, not only for environmental objectives but also for reasons of human health concerns and reduction of nuisance. Two different approaches can be taken intensive production units can be distributed over a wide geographical area to bring the production of waste products in line with the absorptive capacities of the land, and production can be concentrated to benefit from economies of scale in waste treatments. The first approach has successfully moved industrial production units away from urban centres in OECD member countries. Good infrastructure is an important prerequisite for successful zonation as perishable animal products have to be transported over larger distances. Zonation has to consider the marketing and processing infrastructure and be accompanied with supporting policies to facilitate respective investments. The creation of confined industrial parks as an alternative to a geographic spread with, sometimes, shared facilities for waste collection and treatment, offers opportunities to burden industrial production systems with the environmental costs while still maintaining advantages of market access and economies of scale. To a varying extent, zonation may also be obtained through incentives. The strict regulations on manure production and emissions are expected to be further strengthened in the OECD countries and to become increasingly important in the mid-mid-income level countries of Latin America and East Asia.

Table 3.1 Across section of manure management regulations.

Source: Narrod, 1995.

To control the environmental damage caused by excessive application of animal waste, Indonesia, the USA and a number of European countries require farmers to have nutrient management plans that follow best management practices. These usually include timing and methods of application, animal waste collection and storage (Narrod et al., 1994). Guidelines on manure storage and application, which direct method, timing, crops and amounts, are in place in practically all countries with high animal densities.

In the case of processing, regulations which have been introduced to reduce the emission load are often not adequately enforced. The use of chromium in tanneries, the use of CFCs in chilling processes or BOD output in wastewater and waste treatment techniques are frequently prescribed.

Similarly, for environmentally-sensitive feed crop production, the adoption of technologies is increasingly dependent on environmental regulations to conserve soil and water resources, and to minimize the use and impact of, inorganic fertilizers and pesticides. Many developed countries, but increasingly also developing countries, now have regulations controlling land use and agronomic practices, including protection of habitat reserves, forests and wetlands, protection of landscape features, restriction of cultivable areas of damage, control of use of pesticides and other inputs, enforcement of soil conservation measures, limitation of soil nutrient effluents in water courses, control of crop residue disposal methods and others. Furthermore, proper land use planning is an important instrument in containing land degradation. Ideally, feed production should take place in areas of high cropping potential and low susceptibility to erosion and other forms of land degradation. Areas could be categorized according to these two criteria and restrictions on their use imposed, as in, for example, the land targeting successfully practiced in Minnesota (Larson et al., 1988). A strong institutional base is needed for its successful implementation, but this is more likely to be available in the developed and advancing developing countries where most of the teed grains are produced.

Infrastructure development

Public sector investment in infrastructure is warranted for protecting and enhancing public goods. But the effects have not always been beneficial to the environment:

Infrastructure development is essential for achieving a better regional balance between livestock and land. Investments in roads, markets, slaughterhouses and cold storage can support rapid destocking for grazing systems in times of drought. Infrastructure is also indispensable for all polices that aim to reduce animal densities or processing activities in critical areas. Policies to relocate animal production away from the cities can only succeed if transport costs are not prohibitive, and infrastructure is the main component in determining transport costs. At the same time, infrastructure provides market access which is an important prerequisite for most incentive policies.

In contrast, road construction is the single most important factor in deforestation. Discouraging road construction would probably be the most powerful deterrent to ranch and farm establishment. Such a policy could, however, be politically sensitive because proper targeting is difficult and the preservation effect of desisting from infrastructure development has to be weighed against the development needs of the population.

Information, training and extension

Knowledge transfer, in many instances, has to be seen as the key factor to keeping a balance between livestock and the environment. While changing scarcities stimulate a search for new technologies this process can be accelerated by the targeted transmission of technical knowledge at all levels. For example, a traditional technique of straw treatment for cattle feeding, helps not only to convert crop waste products into beef hut also reduces methane emissions. This technique, known since the forties was recently successfully introduced in China and was adopted by seven million farmers within six years (Li-Biagen, 1996). Policy-makers need to keep pace with changing scarcities of production factors, and anticipate them in their technology policies, and they must also take into account the impact of environmental effects and policies on these scarcities. This requires a strong institutional base for technology generation and transfer.

Research, extension and consumer information services are important in the livestock-environment domain. Research, as seen in chapter 2, is essential in order to make an objective valuation of the interactions between livestock and the environment. In addition, alternative technology is badly needed in the grazing systems even though no ecologically and socially viable alternatives to the traditional pastoral systems of the arid zones have yet been identified. While the current efficiency of those traditional systems makes this a formidable task, the strongly growing population pressure in these areas makes it imperative as well.

A considerable array of technologies is available to address environmental issues in mixed farming and industrial systems. The policy and regulatory framework to induce these technologies needs to be established, while research could make a more concerted effort to adapt technologies to changing scarcities and demand. Livestock extension services in the developing world have traditionally focused on animal health services at the expense of production issues and there has been an almost complete neglect of the environmental aspects of livestock production. Improvement will not be easy. The grassroots and front-line extension services in many countries are composed of rather poorly trained and sometimes poorly motivated staff. The introduction of environmentally more benign practices often requires complex social and institutional changes, which these front-line extensionists are poorly equipped to handle. However, some positive results are being achieved, especially when group approaches are followed. Examples are the social forestry projects in India and, in sub-Saharan Africa, in the natural resource management projects now being funded by many government and non-government organizations and by external agencies.

In the industrial countries, the extension service has been forced by the complex systems of regulations on livestock-environment interactions to play an important role in informing farmers about friendlier technologies and related incentives. In effect, a large part of the work of the publicly funded extension service focuses on these issues.

Finally, consumers must be given more objective information on the environmental effects of certain products and production systems. For example, there is a widespread perception that the industrial system is detrimental to the environment. However, as we have seen, this system may indirectly save biodiversity and land in the more fragile ecosystems. Consumers must also be educated abut the need for internalizing environmental costs. Better public information services will be required to convey these messages.

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