Valuing social sustainability in agriculture: An approach based on social outputs' shadow prices

Abstract

Interest in sustainability has gained ground among practitioners, academics and policy-makers due to growing stakeholders' awareness of environmental and social concerns. This is particularly true for agriculture. However, relatively little research has been conducted on the quantification of social sustainability and the contribution of social issues to the agricultural production efficiency. This paper proposes a framework based on state-contingent outputs to compute shadow prices of social outputs. Our methodological approach is based on the directional distance function and illustrated using a farm-level dataset from a sample of Catalan arable crop farms in 2015. Our results indicate that in the sample of 180 farms included in the analysis, efficiency scores are relatively high for the three alternative states of the nature considered in our state-contingent analysis. In addition, our findings show that social outputs' shadow prices are positive, indicating that producing more social outputs is considered as great value to the farm. For the efficient farms, the social outputs' shadow prices are contingent upon on the state of nature, in a way that social outputs' shadow prices increase with the improvement in crop growth conditions. These results have implications in terms of EU farm payment redistribution.