Triple gains: More production, less nitrogen and greater diversity from cropland reallocation in England and Wales

Abstract

Agricultural production is the main driver of nitrogen pollution and diversity loss. This study assesses the potential of cropland reallocation to simultaneously increase production and decrease nitrogen balances, and its impact on crop diversity. Our technological specification extends the by-production approach by dynamically modelling the impact of the N balance from the previous year on current year crop production. We use a robust order-m data envelopment analysis to estimate the production frontier, and the Hill-Shannon index to assess crop diversity before and after optimal cropland reallocation. The application uses Farm Business Survey data from farms in England and Wales between 2015 and 2019. The results show that efficiency gains would have increased crop production by GBP 10.31 per ha and decreased the nitrogen balance by 1.05 kg per ha, when compared with a business-as-usual scenario. Reallocation, only focusing on increasing production, would have increased crop production by GBP 83.74 per hectare and reduced the nitrogen balance by 2.01 kg per ha. Reallocation, focusing on increasing production and decreasing the nitrogen balance, would have increased the former by GBP 71.88 per hectare and reduced the latter by 4.99 kg per ha. The median cropland diversity increases by approximately 0.24 species per farm in both reallocation scenarios. Our results suggest that farmers can simultaneously improve economic and environmental performance, which would increase crop diversity. Effective policies should address barriers to diversification and foster management practices that both increase production and decrease nitrogen balances.