Evaluation of farming system outputs in Lithuania: methodological proposal

Abstract

Agriculture produces jointly market and non-market outputs, and their supply depends on the nature of production. The role of agriculture as an economic activity and its consequences are essential for the Lithuanian case study, as agricultural land covers more than a half of the Lithuanian land. The market does not consider the positive and negative externalities created in agroecosystems. Therefore, specific techniques such as stated preferences methods are used for evaluation of non-market outputs in agriculture. Works by foreign researchers provide a comprehensive analysis of the aspects of nontradable agricultural aspects, usually focusing on evaluation of the benefit or damage to society from agricultural activity. There is lack of an integrated evaluation of farming system outputs in view of the specifics and intensity of farming. The main aim of this paper is to present construction of the methodology for integration of evaluation of farming system outputs in Lithuania, with the main focus on non-market outputs, as the values of agricultural market outputs are clear and fully revealed in official statistics. The conventional and organic farming has been selected for the Lithuanian case study. For the both farming systems, the research covers crops (including both cereals and industrials crops) and livestock (including dairy and cattle) production. The choice experiment (CE) method was selected as appropriate for evaluation of non-market outputs of different farming systems in Lithuanian agriculture. The nested logit was selected for econometric modelling of the value of non-market agricultural outputs. Applying the constructed and checked methodology, consumers’ willingness to pay for agroecosystem public goods of different farming systems will be elicited during the main survey.