The UN introduced a new concept of ecosystem accounting that considers the value of natural capital

Topics on the sustainable use of natural capital have been coming to the fore of the social interest. As agriculture is directly dependent on the use of environmental compartments, it must not only face the impacts of climate change, but also the increasing requirements for the inclusion of environmental objectives in agricultural production. This transformation is to be supported by the Action Plan for the Development of Organic Production that is supposed to motivate farmers to a more environmentally friendly approach. Another important topic in this field is the ground-breaking adoption of a new system of environmental and ecosystem accounts. An increase in the awareness of the value of ecosystem services could change the approach of the private sector to environmental protection and help eliminate environmental risks and increase corporate social responsibility.

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Organic farming as a key to sustainable Europe

Following the Green Deal and the Farm to Fork Strategy, the European Commission introduced the Action Plan for the Development of Organic Production in March 2021. Its objective is to motivate both farmers and processors to introduce innovative production procedures, ensure sustainable production and animal welfare. In relation to the consumer, there should be an increase in guarantees relating to the transparency of organic products, prevention of food frauds and increased promotion of EU products. The Action Plan sees farmers from three different perspectives, as unsuitable agricultural practices may be harmful to the environment, but the efforts of environmentally friendly farmers may have a very positive impact on the landscape, ecosystems and biodiversity. In addition, farmers are exposed to the impacts of climate change and need to look for new production methods which require investments in research.

Starting points for the proposed measures are divided into three thematic axes which address
stimulation of the demand for organic products, support for the transition and strengthening of the value chain, and improvements in the contribution of organic farming towards sustainability.

In order to increase demand, the EU will advertise the EU organic logo, organise information campaigns and promote the consumption of organic products in school canteens and their inclusion in public contracts. In view of the need to increase consumer confidence, the oversight of control systems will be increased, a system of early warning using AI will be introduced and a database for confirmation of all economic operators will be developed.

The above-discussed transition is to be financed through the Common Agricultural Policy in the amount ranging from EUR 38 to 58 billion between 2023 and 2027 and the innovations in this sphere will be supported by the Horizon Europe Programme. The subsidies for local and small processors are to be used for the shortening of the supply chain to appreciate the added value of organic products and concurrently meet the requirements for safety and quality. The principal benefits of the Action Plan are supposed to include a decrease in the climate and environmental footprint of farming and create of carbon-neutral organic businesses. Given the existing agricultural practices, it will be a great challenge to develop seeds with higher genetic variability while maintaining the yields.

In a broader context, the Action Plan is supposed to motivate farmers to use more sustainable practices, assess the benefits of their activities for the environment and facilitate their adaptation to climate change. The European Commission realises that in order to introduce a higher share of organic production and fair income for farmers, it is necessary to ensure a sufficient demand from consumers who, by choosing the appropriate food and introducing lifestyle changes, have a significant influence on meeting the set objectives. Organic farming is a sustainable agricultural system that gained substantial support; however, the implementation of the Action Plan will also depend on intrastate strategies in individual member states and the amount of investments in innovations.

Agriculture and water protection are connected

At present, one of the frequently discussed topics is the impacts of agriculture on individual environmental compartments, primarily the need to ensure the protection and sustainable use of water sources. The European Environmental Agency (EEA) has published a detailed Water and Agriculture: Towards Sustainable Solutions Report, which discusses the impacts of agricultural and food production on the quality and quantity of water and seeks to propose appropriate changes in the existing practices. Considering climate change, the issue of water sources availability is significant for farmers themselves as periods of uncertainty are expected and farmers must be ready to take steps towards increasing the resilience of their farms.

As stated in the Report, the agricultural sector contributes to negative impacts on the levels and condition of water in the European Union, primarily due to dispersed pollution by nutrients and chemicals, water abstraction and change in the form of watercourses. These pressures are often simultaneous, and the harmful effects are all the more intense. Although agricultural practices in the use of natural sources have improved in recent decades, as a result of negative impacts of the agricultural sector, approximately one third of surface water bodies is not in good condition according to the Water Framework Directive.

The Report offers three principal starting points to achieve sustainable agriculture. These consist in an increased resilience of agricultural systems through appropriate management, better integration of the objectives of EU policies and transition to systemic thinking allowing an integrated and global approach to these issues. Specific proposals for measures include, for example, adding the requirements for water protection to the standards for sustainable agricultural production, supporting organic production, or transforming agricultural businesses in order to increase diversification and resilience. In relation to the integration of objectives, the Report mentions the need for the Common Agricultural Policy to reflect the level of the environmental regulation and integrate the standards for effective use of pesticides, nutrients and water in the cross-compliance rules. When it comes to the change in systemic thinking, the Report emphasises the need for an integrated approach that would take into account water protection efforts and the need for agricultural and food production.

Adaptation of agriculture to the risks of climate change is necessary

Agriculture is inherently one of the areas that is most threatened by the impacts of climate change. Agricultural production is directly impacted by natural conditions, for example precipitations, temperatures, humidity, sufficiency of pollinators or good-quality soil. As climate change involves sudden changes in these natural conditions and changes in agricultural yields and the use of soil, it is necessary to look for ways to provide supplies of agricultural commodities to Europe. Considering the significance of agriculture and food safety, the European Environmental Agency (EEA) has long addressed this issue; based on the previous studies, it has published a brief Global Climate Change Impacts and the Supply of Agricultural Commodities to Europe Report, which summarises appropriate measures.

Individual global measures affect international trade in agricultural products as Europe is one of the main exporters of processed food and dairy products; however, it is dependent on the import of fodders and commodities for secondary processing. In order to reduce the risk of supply disruption, it is necessary to diversify the group of importers and commodities where possible. In particular, rules should be set for reducing risky supply chains of commodities that are associated with environmental impacts, which should be reflected in international trade agreements. As the impacts of climate change go beyond borders, there is space for international cooperation and Europe should support the adaptation of agriculture in partner producer countries.

What does diversity mean for business?

Biodiversity has become the central point of focus in environmental protection. Although ecosystem services are included in the solution aiming to mitigate the impacts of climate change, we are failing to stop the worldwide biodiversity loss resulting from unsustainable use of natural sources and climate change impacts. The need for the protection of biodiversity and ecosystem services is therefore a significant and widely discussed topic. But what does biodiversity mean for businesses in practice? Companies should focus on the risks relating to their dependence on specific ecosystem services and create frameworks for the elimination of the discussed risks. With this experience in mind, it is possible to determine a strategy with clear objectives and start cooperation across the supplier chain – in this way, it is possible to actively support ecosystem services and ensure corporate social responsibility.

Ground-breaking system for the assessment of environmental benefits  

Considering the involvement of the private sector in the protection of biodiversity, it has long been addressed how to assess the benefit of the environment for farming and the impact of farming on the environment. To this end, the UN Statistical Commission adopted a new breakthrough System of Environmental-Economic Accounting—Ecosystem Accounting (SEEA EA) in March 2021. This system goes beyond the existing statistical approaches based on the gross domestic product (GDP) and takes into account the value of natural capital. The significance of this system consists in the provision of information for strategic economic planning and analysis of policies with the objective of achieving sustainable development. The European Commission supported the creation of this single international system and has already announced a review of the Regulation on European environmental economic accounts, in order for it to reflect the new assessment of benefits for the environment. For the implementation of the obtained data, the European Commission uses its own Integrated System of Natural Capital and Ecosystem Services Accounting for the European Union (INCA), which contributed to the creation of the single international  SEEA EA system on the UN level.

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