Monday, December 10, 2007

Food prices and ecosystem services

According to The Economist: The Economist's food-price index is now at its highest since it began in 1845, having risen by one-third in the past year.

With a longer term rise in food prices (see graph as published in the Economist), expect more pressure to farm marginal land and to increase production efficiencies.

This is not good news for the payment for ecosystem services (PES) movement, reported on in an earlier article on this blog. The land owner will respond to market signals on where the highest returns are possible. After 30 years of decline in food prices, farmers will again benefit.

Although ecosystems services are of considerable value, this value is not generally traded in the marketplace. If there is no signal on achieving returns on preserving ecosystem services, such services will be treated as if they are free, with knee jerk reactions to possible systems collapse in future.

Rising food prices only reinforces the importance of creating effective markets for ecosystem services sooner then later. With rising prices for carbon the tide may be turning, but it is still a long way before the worldwide market failure on ecosystem services is corrected.

Rising food prices increase the urgency to respond.

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