Understanding the central role played by soil

 Understanding the central role played by soil is key to management of land-based resources and to agricultural production. Soil itself provides a habitat and gene reserve for many micro-organisms, which can contribute to both soil productivity and biodiversity above ground. Soil stores nutrients and water, regulates and filters the flow of rainfall to plants and groundwater, and absorbs and releases atmospheric gases. Maintaining and enhancing soil quality is a high priority area for realizing Green Growth in the agricultural sector. This depends on integrated land management approaches which include appropriate cultivation, crop rotations, fewer chemical inputs, and careful selection of seed varieties. Techniques that improve soil fertility can yield economic benefits by increasing agricultural productivity and environmental benefits by enhancing biodiversity. However, land management approaches must be matched to particular areas and ecosystems

. For example, soil conservation practices on heavy soils in temperate climates will not be suitable for soils in warm wet equatorial zones. Even within a particular region, there will be considerable variation between the agricultural potential and environmental vulnerability of different sub-areas. Integrated land use planning aims to identify areas where a particular technology can provide multiple benefits for farming, ecosystems and communities. Effective implementation of land management strategies also depends on the full co-operation of the land users and local communities. 25 Biodiversity loss Increasing rates of global biodiversity loss as evidenced in the decreasing array of plant and animal species are driven by a number of interrelated factors. These include conversion of land to agricultural uses, unsustainable management of natural resources, pollution, invasive alien species, and climate change. Healthy ecosystems provide vital and valuable resources and services to economies and societies, although these services are usually not monetized. For those who place inherent worth on the vitality of the natural world, preserving biodiversity is also an ethical concern. The agricultural sector can both contribute to and prevent loss of biodiversity. Farm activities can have adverse impacts on biodiversity in terms of: a) the genetic diversity of crops and livestock, b) the diversity of wild species which may use habitats affected by farming activity, and c) the diversity of ecosystems which suffer the impacts of land conversion and certain agricultural practices. The diversity of genes in domesticated plants and livestock is decreasing due to commercial mono-plantations of single species and homogenization of agricultural production systems, the use of invasive alien species in plantations, and reductions in types of dairy and other stock. In terms of animal habitats, the increasing demand for food products is expected to lead to 10% more land use for agriculture worldwide, mainly in developing regions with high levels of biodiversity. In addition, agricultural activities such as tillage, drainage, rotation, grazing and extensive usage of pesticides and fertilizers have undesirable impacts on habitats, wild species of flora and fauna, and ecosystems. However, agriculture can also help preserve and enhance biodiversity through greener approaches to management of land and other natural resources. Habitats and ecosystems can be set aside and maintained through appropriate techniques. Soil management practices can significantly enhance soil life and below ground biodiversity. Higher levels of agricultural biodiversity also increase productivity in agriculture through reduced pest incidence, improved soil nutritional levels, crop pollination, and hydrological functions. Agricultural biodiversity generates significant option values in conserving genetic resources that can be the basis for the development of new crop varieties and animal breeds. Preserving agricultural biodiversity depends on fuller recognition of the importance and economic value of natural resources including soils and forests and the ecosystem services they provide. Valuable approaches for promoting agricultural practices which promote biodiversity conservation are Payments for Ecosystem Services (PES). PES provide financial transfers to landowners, farmers and communities whose land use decisions may affect biodiversity values and create incentives for conservation of plant and animal species. Four types of environmental services provided by agriculture and which could qualify for PES payments have been identified: i) supporting services (e.g. biodiversity, photosynthesis, soil formation); ii) provisioning services (e.g. food, water, wood, fiber and fuel); iii) regulating services (e.g. climate regulation, flood regulation, drought control); and iv) cultural services (e.g. recreation, aesthetics). Most existing PES schemes in agriculture give payments to avoid soil erosion, contamination of water supplies, and landscape degradation. 26 Several OECD and non-OECD countries have implemented PES schemes. The German government charges water utilities groundwater extraction fees, part of which are used to pay farmers to protect groundwater by reducing use of nitrogen-based fertilizers and pesticides. In countries such as Costa Rica and Argentina, laws have been enacted to provide the regulatory basis to contract landowners for the climate and biodiversity services provided by their land. There are also several private schemes which pay for ecosystem services in agriculture. For example, the Vittel (Nestlé Waters) program in France aims to maintain high water quality by paying farmers in the watershed to adopt low-impact practices in dairy farming. Innovative financial mechanisms that can be used to promote biodiversity conservation are also being explored at the international level. The Convention on Biological Diversity (CBD) has supported about 30 PES schemes to compensate resource managers for off-site ecological benefits. The Reduction of Emissions from Deforestation and Forest Degradation (REDD) program has been proposed under the United Nations Framework Convention on Climate Change (UNFCCC) to help internalize the carbonrelated ecosystem services provided by forests. REDD+ programs include agriculture and wetlands and could offer substantial biodiversity co-benefits. International finance delivered to achieve carbon emission reductions in areas that have both high carbon and high biodiversity benefits could help mitigate both climate change and biodiversity loss. These would be multi-level initiatives extending from international agreements through national legal structures to the sub-national level of land owners and communities (Figure 4). Figure 4: Model of Payment for Environmental Services (PES) Scheme Source: FAO, 2010 27 Biomass production The economic and environmental effects of biomass production on the agricultural sector are diverse and location-specific. Biomass is used as a fuel (e.g. firewood, bio-diesel, bio-kerosene, and ethanol) and as a raw material for the pulp and paper, lumber, furniture, and construction industries. However, the use of agricultural resources for biomass production, particularly bio-fuels, competes with their use for food output and can negatively affect land use patterns, food supply and food prices. Governments are promoting the production of bio-fuels for their contributions to developing lowcarbon sources of energy and reducing greenhouse gas emissions as well as enhancing energy security. Bio-fuel production also creates new market outlets for sugar, cereals and oilseed helping to boost farm incomes and rural development. But higher demand can result in agricultural land use changes, including deforestation, as farmers shift large tracts of cropland and forests to produce inputs for biofuels. At the same time, questions have been raised about the effectiveness of bio-fuels in reducing net greenhouse gas emissions and the increased competition with food resources which raises food prices. Bio-fuels are becoming a more significant element in the energy mix due partly to trends in prices for fossil fuels. Higher oil prices lead to increased investments in bio-fuel production seen as an alternative to carbon-intensive energy sources. Increased demand for energy, decline in low-cost sources of petroleum and restrictions on carbon emissions are expected to raise the cost of fossil fuels and create a growing market for biomass, including non-food crops such as grasses and trees, as a feedstock for biofuels, chemicals and plastics. However, this is resulted in a doubling or tripling of prices for grain and other agricultural inputs to bio-fuel production. Increases in bio-fuel production are driven by policy incentives – renewable energy mandates and tax concessions 

– as well as economics. Governments in many OECD and non-OECD countries actively promote the production and use of alternative transport fuels made from agricultural commodities. The Renewable Fuels Standard (RFS2) in the United States and the Renewable Energy Directive (RED) in the European Union mandate levels of renewable energy in the overall mix acting to stimulate investment in and production of bio-fuels from agricultural commodities. Brazil, the United States, and the European Union account for 80%-90% of global bio-fuel output at present. While bio-fuel production can be economically and environmentally viable in countries such as Brazil which produce ethanol from sugar cane, this is not the case in many OECD countries. Crops used for OECD bio-fuel production -- wheat, sugar beets and vegetable oils – do not result in comparative savings on greenhouse gas emissions. Whereas ethanol based on sugar cane generally reduces emissions by 80% relative to fossil fuels, ethanol feedstock in OECD countries obtains emission reductions of between 30%-60% not taking into account the negative effects of land use conversion. Nor does bio-fuel production contribute to energy security since significant levels of fossil fuels continue to be used. Supports and mandates stimulating bio-fuel output in OECD countries have had negative impacts on food supply and crop prices (Figure 5). With global production of ethanol and bio-diesel projected to increase by 14% and 60% on average, respectively, due to government supports, the use of feedstock commodities would be substantially higher. Bio-fuel support measures are projected to increase average 28 wheat, maize and vegetable oil prices by about 5%, 7% and 19%, respectively, in the medium term. New bio-fuel support initiatives and mandates will put further upward pressure on commodity prices in the future.