Land sharing vs land sparing to conserve biodiversity: How agricultural markets make the difference
This article (PDF), published in the Environmental Modeling & Assessment journal, models the supply and demand for agricultural goods and assess and compares how welfare, land use, and biodiversity are affected under intensive and extensive farming systems at market equilibrium instead of at exogenous production levels. As long as demand is responsive to price, and intensive farming has lower production costs, there exists a rebound effect (larger market size) of intensive farming. Intensive farming is then less beneficial to biodiversity than extensive farming is, except when there is a high degree of convexity between biodiversity and yield. On the other hand, extensive farming leads to higher prices and smaller quantities for consumers. Depending on parameter values, it may increase or decrease agricultural producer profits. Implementing “active” land sparing by zoning some land for agriculture and other land for conservation could overcome the rebound effect of intensive farming. Although, the authors show that farmers have then incentives to encroach on land zoned for conservation, with higher incentives under intensive farming. The authors also show that the primary effect of the higher prices associated with extensive farming is a reduction of animal feed production, which has a higher price elasticity of demand, whereas less of an effect is observed on plant-based food production and almost no effect is observed on biofuel production if there are mandatory blending policies.