September 29, 2022

The False Benefit of Less Land Use for Agriculture

Even as population has grown, increasing the particular intensive margin for agriculture has led to increased food production

Earlier this year,   Our World in Data celebrated the fact   we have now passed “ peak agricultural land”: over the last few decades, the global land area devoted to meals production has declined.

As the decline is not large even though the data is uncertain, the fact itself is significant and never in dispute: until recently, agricultural land use increased exponentially to feed the particular world’s growing population.

This was hailed as being a major achievement and as the movement out of the darkness from the past, when man used nature and was poor and hungry anyway.

It “ marks a historic time in humanity’s relationship towards the planet; a crucial step in its protection of the world’s environments, ” noted Our World in Data.

At HumanProgress, in an  article otherwise devoted to the laudable goal associated with exposing the idiocy of government-mandated organic farming , the authors noted that will due to declining land use, “ more land can be returned to natural ecosystems, which are far more biodiverse compared to any farm. Smart farming allows nature to come back. ”

No matter the benefits of such a rebound, We submit that the hosannas are usually premature, that the real significance of declining land usage has escaped the writers at both HumanProgress plus Our World in Data.

In reality, this particular development bespeaks a massive malinvestment of capital: instead of creating virgin lands around the world, enormous amounts of capital have been poured into an ever more extensive exploitation of existing farmland in developed countries.

The Economics of Land Use

One reason declining agricultural land use is seen as a good thing is the notion that the supply of land is limited in some absolute sense.

“ Buy land. They aren’t making more of it, ” because the old saying goes. Other than that they are.

To understand this, we need to distinguish between the physical and the financial supply of land.

The physical availability of land is limited by the globe’s surface area. The economic supply of land, however , is much more flexible: the only limit is, eventually, profitability.

Some land is supramarginal and some is submarginal, meaning that cultivating it is not worth the expenditure. Where exactly to draw the line between the 2 is a matter of economic calculation: Will the rent of the land— i. e., the income from a given land area’s contribution to production— be enough to defray the outlays on cultivating it and provide an acceptable revenue?

More than history, more and more land has been brought under the plough— and not only in previously pending lands like the Americas. Western european history is one of expanding land use from the Ancient until the twentieth century.

Land, then, is not really scarce in a different feeling from other economic goods: more of it can and has been produced. In more primitive— i. electronic., less capitalistic— times, inhabitants growth has led to greater land use, as  explained in detail   by the economist Ester Boserup.

However , there is always a choice between tilling the land under farming more intensively— i. electronic., with more capital inputs— or cultivating new lands. Provided the comparatively low cost associated with land and better expenditure opportunities elsewhere, farmers possess historically tended to increase their particular total acreage rather than develop more capital-intensive techniques.

Most famous, perhaps, is the example of the modern Holland, a land largely gotten back from the sea as farmers over the centuries invested in dikes and drainage canals in order to enlarge the arable lands at their disposal, but the same happened across the civilized world: property reclamation of various kinds was an ongoing activity as nations developed and became a lot more capitalistic.

Malinvestments in Modern Farming

Following the Second World War, this particular dynamic changed. One reason behind this is an institutional change: there is still plenty of land out there, but it was no longer as straightforward to go out and take possession of it.

There are huge swathes of empty land within Russia; many parts of The african continent, despite overpopulation worries, are practically devoid of people. But in these countries (and virtually everywhere else) it is no longer possible to settle virgin countries and claim them to get yourself— the state forbids that.

The Soviets  tried their hands   at deciding some of the wildernesses of Main Asia and Siberia with large collectivized farms in the “ Virgin Lands campaign” under Nikita Khrushchev, yet this was an abysmal failure.

More important compared to this change in entry to new lands, however , was a change in the economics of agriculture.

After World War II, government subsidy programs led farmers to focus on increasing output. Subsidies were paid for by intervening to set a cost far above the world selling price of wheat and no matter what other products politicians wanted to subsidize.

Since the price farmers obtained no longer fell as quantity supplied rose, farmers across the Western countries invested seriously in intensive cultivation associated with whatever crops were subsidized.

This alone led the world to be overloaded by the West’s excess generate and caused world marketplace prices to fall as production outpaced population growth. Another, more hidden cause amplified this tendency towards more intensive cultivation: the particular rise of the postwar inflationary monetary system.

I have previously described how  inflation led to changing production patterns   in agriculture.

In general, it resulted in much more capital-intensive cultivation, as the inflationary system favored bank funding for capital investment in agriculture— investments that were also urged on by government officials eager to “ modernize” farming according to their own vision of the future.

These investments, however , were short term: focused with boosting the  bodily   productivity associated with farming rather than ensuring its greater long-term  value   productivity. For example, more artificial fertilizer becomes available and its use seemingly rewarding, leading to a rise in the land’s physical productivity.

As already noted, nevertheless , basic food production only needs to keep up with population development.

Any expansion of production over this level is uneconomic, and farmers were dissuaded from it by what is known as Engel’s law: as income boosts, the percentage spent on food decreases. Or, from the farmer’s point of view, the demand with regard to food is, above a very basic level, inelastic.

Any expansion associated with production will therefore lead to lower revenues— unless populace expands and demand as a result rises.

Farm investment, therefore , should tend to favor greater value productivity over greater actual physical productivity— for instance, expanding dairy or beef production instead of cereal production— and capital investment would generally take other areas of the economy.

This, in fact , is what we saw before the twentieth century: other divisions of industry expanded considerably faster than agriculture, and the creation of more valuable food expanded.

This pattern changed with all the “ modernization” of farming after World War II, driven by subsidies and privileged financial.

The particular physical productivity of land expanded by leaps and bounds due to extremely capital-intensive new techniques.

However , rather than progress in any meaningful sense, this really is simply the inevitable result of a good artificially induced flow of capital to agricultural advices such as fertilizer, pesticides, plus machines. Land use is bound to decline elsewhere when more intensive land use leads to a huge increase in physical efficiency and a consequent rise in the supply of cereals.

Land Use Excellent

Lastly, land use is not a negative thing. Perhaps some creatures will be driven out as the wilderness is cultivated, but other ecological systems can arise connected to farming and other land uses.

There may be some reality to worries over modern agriculture and how the intense use of artificial fertilizer and pesticides causes the damage of the ecology surrounding farming.

However , to the extent that this holds true, we can see that it is the result of the particular drive to modernize farming since the 1940s— a generate, again, that was wholly artificial, led to much more intensive land use, and resulted through subsidies and credit expansion.

If there are some ecological niches or systems that are completely incompatible with human land use, then there are only two choices: either these systems will disappear because no one cares about them or environmentalists may care enough to do something to preserve them.

Today this regrettably often takes the form of lobbying governments to use assault against peaceful people, but it can— and sometimes does— take the form of simply buying the land to protect whatever endangered species or ecological niche market happens to strike the environmentalists’ fancy.

Only if agricultural land use declines due to such non-reflex purchases of land intended for environmental purposes could all of us meaningfully claim that less farming land use is a good factor.

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