Professor Jussi Lankoski

Our first Guest of the Month, Jussi Lankoski, is the professor of Economics of the Baltic Sea Protection in the Department of Economics and Management in the University of Helsinki Faculty of Agriculture and Forestry.

Jussi Lankoski defended his doctoral dissertation in environmental economics in 2003. During his professional career, he has, for example, worked as senior economist in MTT Agrifood Research Finland, economist in OECD, and as senior economist in the European Chemicals Agency ECHA.

What do you see as the biggest challenges when moving towards sustainable agriculture?

“Livestock production culminates many of the essential environmental challenges of agriculture.” It is a global fact that food production needs to grow in order to meet the ever increasing demand resulting from population growth in particular. In addition, dietary changes, especially the increase in meat consumption, have a significant effect on a global level. Manure affects the water bodies; the climate effects are significant, as well. “That’s the true challenge: how to increase food production without adding significantly to the most problematic environmental effects, such as climate and water quality effects.”

What do you see as the most promising policies, methods or technologies in the agri-environmental context?

Lankoski sees that the current environmental subsidy system, where certain environmental measures taken by farmers are agreed on in advance and the subsidy is the same for everyone everywhere, has reached the end of its road. “We need to switch to systems/mechanisms which acknowledge that both the environmental benefits of protection and farmers’ compliance costs vary by the region and even across field parcels.”

On a related note, Lankoski states that one extremely promising policy instrument is competitive bidding, also called green auctions in this context. In agriculture, this means utilizing the field parcel -specific environmental benefit index, which represents the environmental sensitivity of the given field parcel. A farmer will make a bid , stating the price (s) he is willing to accept to implement certain environmental measures in the field parcel in question. This bid constitutes the cost of farmer’s offer. The field parcels can thus be ranked on the basis of benefit-cost ratio, and the best ones can be selected to the program in accordance with the program budget. Lankoski says that the model shows potential in terms of various environmental effects in addition to nitrogen and phosphorus runoff, such as biodiversity and even climate policies.

“Another new policy instrument is the nutrient trading or water quality trading” Lankoski continues. Nutrient trading often occurs between point source polluters and non-point polluters. Nevertheless, at the moment it can be said that competitive bidding holds far more potential and is much more extensively used e.g. in the United States, where most of the pilot projects in nutrient trading have not been very successful.

What is your personal relationship with the Baltic Sea?

“I use the ecosystem services of the Baltic Sea almost daily, such as the recreational services,” Lankoski says. He lives in Helsinki and roams the coast of the Baltic Sea on a daily basis. He also likes to go boating in the summer and skiing on the ice in the winter.

You feel the environmental program of Finland has not been very effective, so – based on the past – what are the most important means for reducing the nutrient load in the future?

“I think the starting point for everything is that it’s not realistic to expect that the entire policy system could be scrapped and the slate wiped clean.” Lankoski feels that the sensible thing to do is to detach a part of the agri-environmental subsidy budget and create a system based on competitive bidding or a system with differentiated levels of subsidies. “The point in both systems is that subsidies would be paid for spatially targeted measures. Meaning that measures should be targeted at field parcels where the environmental benefits are the greatest or the ratio environmental benefits and costs are good.” Lankoski says that targeting is the most important aspect but competitive bidding could be added to it in order to improve cost-effectiveness. Alternatively, subsidies could be differentiated so that higher subsidies would be paid to areas with greater environmental sensitivity in order to provide strong incentives for farmers to take action.

“At the moment it looks like it’s difficult to reduce the nutrient runoff from agriculture,” Lankoski continues. Phosphorus for example; the amount of dissolved phosphorus runoff depends on runoff and soil phosphorus. Soil phosphorus stock decreases slowly when fertilization is reduced. Even if phosphorus fertilization was stopped completely right now, it would take a long time before soil phosphorus level would be low enough to reduce dissolved phosphorus runoff. Another aspect is the particulate phosphorus runoff. It is easy to mitigate; when you mitigate erosion, you mitigate v particulate phosphorus runoff. The only problem is that only fraction of particulate phosphorus is readily available for algae growth, which means that the changes to actual phosphorus load may not be significant.

“In terms of nitrogen policy, changes can be quickly achieved”, says Lankoski. For example, reduced tillage or no-till farming will reduce nitrogen runoff. “But I’m not sure how effective current fertilizer use constraints have been in reducing nitrogen runoff”, he continues. Moreover, real problem with fertilizer use and manure application constraints is that their enforcement may be weak, since perfect monitoring is difficult and thus policymakers should favor environmental measures that are easy to monitor and enforce, such as measures related to land use (green fallowing, buffer strips etc). “In any case, it could be said that it’s wrong to think that municipalities shouldn’t any more improve their emissions reductions but we should rather invest in reducing agricultural emissions, as agriculture is presumably cheaper way of achieving emission reductions. This isn’t true,” Lankoski says. Especially in terms of phosphorus, it may be the case that agriculture is unable to achieve target reduction of phosphorus runoff and thus Finnish high-quality wastewater treatment needs to be improved even more in order to reduce the total phosphorus emissions from Finland to Baltic Sea.

What do you think are the most important geographical and/or sector-related problem areas?

“Agriculture is the most challenging sector of all. It is responsible for the majority of non-point pollution in all countries and it is the most difficult sector to manage”, says Lankoski. For example, when Poland receives full EU subsidies, it is encouraged to increase production. That may prove to be a challenge unless EU agri-environmental subsidies or similar policy instruments are employed at the same time on a wider scale. In addition, on a geographical level, the loads from poultry and pig industry in the St Petersburg region in Russia should be reduced significantly as soon as possible according to Lankoski.