Agriculture, Profitability and Climate Change: Can Accounting Help Identify Best Farming Practices? Empirical Case Study in Spain

Carla  Antonini; Josep María  Argilés-Bosch

doi:10.4236/as.2017.83015

Carla Antonini, Josep María Argilés-Bosch

Abstract:

We perform an empirical analysis on the benefits of, and the challenges faced by, sustainability accounting in measuring the effects of climate change for a sample of Spanish rice farms. We use farm yields, revenues and incomes as indicators of economic performance, and greenhouse gas emissions, and direct and indirect energy consumption as indicators of climate change effects. According to our data, farms with higher yields, revenues and income are responsible for a greater environmental impact, measured in total gigajoules of energy consumed and tons of carbon dioxide emitted, than farms with a lower economic performance. Results show that in our sample the achievement of higher yields is attributable to the greater use of chemical inputs and fossil fuels and not to innovative and sustainable farming practices. The results indicate that accounting for climate change effects is not only possible but also necessary to provide more accurate information on the overall costs and benefits of farming. Greater transparency in accounting information should serve to highlight which farming activities are better able to reduce climate change impacts.

Keywords: Climate Change Accounting, Economic Performance, Energy Consumption, Greenhouse Gas Emissions, Rice Production, Sustainability Accounting

Cite this paper: Antonini, C. and Argilés-Bosch, J. (2017) Agriculture, Profitability and Climate Change: Can Accounting Help Identify Best Farming Practices? Empirical Case Study in Spain. Agricultural Sciences, 8, 209-226. doi: 10.4236/as.2017.83015.

References

[1] Stern, N. (2006) What Is the Economics of Climate Change? Review Literature and Arts of the Americas, 7, 153-157.

[2] Burritt, R.L. and Schaltegger, S. (2012) Measuring the (Un-)sustainability of Industrial Biomass Production and Use. Sustainability Accounting, Management and Policy Journal, 3, 109-133.
https://doi.org/10.1108/20408021211282377

[3] Bebbington, J. (2001) An Account of Sustainability: Failure, Success and a Reconceptualization. Critical Perspectives on Accounting, 12, 557-588.
https://doi.org/10.1006/cpac.2000.0450

[4] Zamora Ramírez, C. and Gonzalez Gonzalez, J.M. (2013) Climate Change Challenges to Accounting. Low Carbon Economy, 4, 25-35.
https://doi.org/10.4236/lce.2013.41003

[5] Mathews, M.R. (1995) Social and Environmental Accounting: A Practical Demonstration of Ethical Concern? Journal of Business Ethics, 14, 663-671.
https://doi.org/10.1007/BF00871347

[6] Schaltegger, S., Burritt, R. and Petersen, H. (2003) An Introduction to Corporate Environmental Management. Striving for Sustainability. Greenleaf Publishing Limited, Sheffield.

[7] Goyal, P., Rahman, Z. and Kazmi, A. (2013) Corporate Sustainability Performance and Firm Performance Research: Literature Review and Future Research Agenda. Management Decision, 51, 361-379.
https://doi.org/10.1108/00251741311301867

[8] Wahba, H. (2008) Does the Market Value Corporate Environmental Responsibility? An Empirical Examination. Corporate Social Responsibility and Environmental Management, 99, 89-99.

[9] Pérez-Calderón, E., Milanés-Montero, P. and Mondéjar-Jiménez, J. (2011) Eco-Efficiency: Effects on Economics and Financial Performance. Evidences from Dow Jones Sustainability Europe Index. Environmental Engineering and Management Journal, 10, 1801-1808.

[10] Rassier, D.G. and Earnhart, D. (2009) Does the Porter Hypothesis Explain Expected Future Financial Performance? The Effect of Clean Water Regulation on Chemical Manufacturing Firms. Environmental and Resource Economics, 45, 353-377.
https://doi.org/10.1007/s10640-009-9318-0

[11] Jacobs, B.W., Singhal, V.R. and Subramanian, R. (2010) An Empirical Investigation of Environmental Performance and the Market Value of the Firm. Journal of Operations Management, 28, 430-441.
https://doi.org/10.1016/j.jom.2010.01.001

[12] Reilly, J.M. (2012) Green Growth and the Efficient Use of Natural Resources. Energy Economics, 34, S85-S93.
https://doi.org/10.1016/j.eneco.2012.08.033

[13] Déjean, F. and Martinez, I. (2009) Environmental Disclosure and the Cost of Equity: The French Case. Accounting in Europe, 6, 57-80.
https://doi.org/10.1080/17449480902896403

[14] Cho, C.H. and Roberts, R.W. (2010) Environmental Reporting on the Internet by America’s Toxic 100: Legitimacy and Self-Presentation. International Journal of Accounting Information Systems, 11, 1-16.
https://doi.org/10.1016/j.accinf.2009.12.003

[15] De Ponti, T., Rijk, B. and Van Ittersum, M.K. (2012) The Crop Yield Gap between Organic and Conventional Agriculture. Agricultural Systems, 108, 1-9.
https://doi.org/10.1016/j.agsy.2011.12.004

[16] Mekhilef, S., Faramarzi, S.Z., Saidur, R. and Salam, Z. (2013) The Application of Solar Technologies for Sustainable Development of Agricultural Sector. Renewable and Sustainable Energy Reviews, 18, 583-594.
https://doi.org/10.1016/j.rser.2012.10.049

[17] Stavi, I. and Lal, R. (2013) Agriculture and Greenhouse Gases, a Common Tragedy. A Review. Agronomy for Sustainable Development, 33, 15.
https://doi.org/10.1007/s13593-012-0110-0

[18] OECD (2001) Environmental Indicators for Agriculture. Methods and Results. Policy. OECD Publishing, Paris.

[19] Pimentel, D., Hepperly, P., Hanson, J., Douds, D. and Seidel, R. (2005) Environmental, Energetic, and Economic Comparisons of Organic and Conventional Farming Systems. Bioscience, 55, 573-582.
https://doi.org/10.1641/0006-3568(2005)055[0573:EEAECO]2.0.CO;2

[20] Pimentel, D. and Burgess, M. (2012) Small Amounts of Pesticides Reaching Target Insects. Environment, Development and Sustainability, 14, 1-2.
https://doi.org/10.1007/s10668-011-9325-5

[21] Mondelaers, K., Aertsens, J. and van Huylenbroeck, G. (2009) A Meta-Analysis of the Differences in Environmental Impacts between Organic and Conventional Farming. British Food Journal, 111, 1098-1119.
https://doi.org/10.1108/00070700910992925

[22] OECD (2012) Water Quality and Agriculture: Meeting the Policy Challenge, OECD Studies on Water. OECD Publishing, Paris.

[23] Anielski, M., Griffiths, M. and Wilson, S. (2002) The Alberta GPI Accounts: Agriculture. The Pembina Institute, Alberta, 55.
http://pubs.pembina.org/reports/19_agriculture.pdf

[24] Godfray, H.C.J., Beddington, J.R., Crute, I.R., Haddad, L., Lawrence, D., Muir, J.F., Pretty, J., et al. (2010) Food Security: The Challenge of Feeding 9 Billion People. Science, 327, 812-818.
https://doi.org/10.1126/science.1185383

[25] Bebbington, J., Brown, J. and Frame, B. (2006) Accounting Technologies and Sustainability Assessment Models. Ecological Economics, 61, 224-236.
https://doi.org/10.1016/j.ecolecon.2006.10.021

[26] Larrinaga-Gonzélez, C. and Pérez-Chamorro, V. (2008) Sustainability Accounting and Accountability in Public Water Companies. Public Money and Management, 28, 337-343.

[27] Stolze, M., Piorr, A., Häring, A. and Dabbert, S. (2000) The Environmental Impacts of Organic Farming in Europe. Organic Farming in Europe: Economics and Policy. Vol. 6, Department of Farm Economics, University of Hohenheim, Stuttgart, 143.

[28] Koohafkan, P., Altieri, M.A. and Gimenez, E.H. (2012) Green Agriculture: Foundations for Biodiverse, Resilient and Productive Agricultural Systems. International Journal of Agricultural Sustainability, 10, 61-75.
https://doi.org/10.1080/14735903.2011.610206

[29] Sipiläinen, T., Marklund, P.O. and Huhtala, A. (2008) Efficiency in Agricultural Production of Biodiversity: Organic vs. Conventional Practices. In: 107th EAAE Seminar “Modeling of Agricultural and Rural Development Policies”, Sevilla, 29th January-1st February 2008.
http://econpapers.repec.org/paper/agseaa107/6478.htm

[30] Lansink, A.O., Kyosti, P. and Backman, S. (2002) Efficiency and Productivity of Conventional and Organic Farms in Finland 1994-1997. European Review of Agricultural Economics, 29, 51-65.
https://doi.org/10.1093/erae/29.1.51

[31] Bickel, P. and Friedrich, R. (2005) Externe: Externalities of Energy: Methodology 2005 Update. Office for Official Publications of the European Communities, Luxembourg.

[32] Tegtmeier, E.M. and Duffy, M.D. (2004) External Costs of Agricultural Production in the United States. International Journal of Agricultural Sustainability, 2, 1-20.
https://doi.org/10.1080/14735903.2004.9684563

[33] Pretty, J., Ball, A., Lang, T. and Morison, J. (2005) Farm Costs and Food Miles: An Assessment of the Full Cost of the UK Weekly Food Basket. Food Policy, 30, 1-19.
https://doi.org/10.1016/j.foodpol.2005.02.001

[34] Calpe, C. (2006) Rice International Commodity Profile. Food and Agricultural Organization of the United Nations, Rome.
http://www.fao.org/fileadmin/templates/est/COMM_MARKETS_MONITORING/Rice
/Documents/Rice_Profile_Dec-06.pdf

[35] MAGRAMA (2013) Arroz en Espana. Cultivos herbáceos e industriales.
http://www.magrama.gob.es/es/agricultura/temas/producciones-agricolas/cultivos-herbaceos/
arroz/

[36] United Nations (1998) Kyoto Protocol to the United Nations Framework Convention on Climate Change.
http://unfccc.int/kyoto_protocol/items/2830.php

[37] Lueck, D. and Allen, D. (1998) The Nature of the Farm. Journal of Law and Economics, 41, 343-386.

[38] Schmitt, G. (1997) Opportunity Costs of Farm Family Labour and Optimal Farm Size. Berichte über Landwirtschaft, 75, 35-65.

[39] Bakam, I., Balana, B.B. and Matthews, R. (2012) Cost-Effectiveness Analysis of Policy Instruments for Greenhouse Gas Emission Mitigation in the Agricultural Sector. Journal of Environmental Management, 112, 33-44.
https://doi.org/10.1016/j.jenvman.2012.07.001

[40] World Business Council for Sustainable Development, & World Resources Institute (2001) The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard. World Resources Inst.
http://www.ghgprotocol.org/standards/corporate-standard

[41] Elphick, C.S. (2000) Functional Equivalency between Rice Fields and Semi-Natural Wetlands Habitats. Conservation Biology, 14, 181-191.
https://doi.org/10.1046/j.1523-1739.2000.98314.x

[42] Life + 09 ENV/ES/000441, 2013—Project of the European Commission.

[43] ISO (2006) ISO 14064-1: Greenhouse Gases—Part 1: Specification with Guidance at the Organization Level for Quantification and Reporting of Greenhouse Gas Emissions and Removals.

[44] WRI (2012) Greenhouse Gases Protocol. World Resources Institute.
http://www.ghgprotocol.org/about-ghgp