Vincent de Leijster

72 Chapter 4 Table 4-3. Net present value (NPV), Internal rate of return (IRR) and Discounted payback time (DPBT) for the four treatments: conventional tillage (CT), no tillage (NT), green manure (GM) and compost (CM). CT NT GM CM Output variable Unit Mean SD Mean SD Mean SD Mean SD NPV € 7,364 1,388 732 807 2,284 1,294 8,631 2,942 IRR % 13.5 1.5 6.3 1.4 8.2 1.8 13.7 2.7 DPBT y 11.7 1.5 22.1 4.4 17.8 3.9 11.9 2.9 4.3.3 Policy options Compensating opportunity costs: Public and private policy incentives We modelled the effects of implementing a public greening payment for agroecological management on the NPV of different treatments. Without public payments, CM had higher an NPV than CT and additional public greening payments would increase this difference (Figure 4-2.a). Because NPV of NT and GM were lower than CT, the breakeven point of public greening payments was respectively €321.30 ha -1 y -1 and €430.27 ha -1 y -1 for GM and NT. Price premiums on almond sales were considered as a private incentive to compensate for opportunity costs (Figure 4-2.b). GM required an almond price of €8.25 kg -1 (or €1.75 kg -1 premium) to compensate for the opportunity costs, which corresponds to an average of €386.95 ha -1 y -1 . NT required an almond price of €9.43 kg -1 (or €2.93 kg -1 premium), which corresponds to an average of €644.09 ha -1 y -1 . Hence, total compensation was higher for price premiums. Figure 4-2.c shows how a combination of price premiums and public greening payments affects NPV. Internalizing environmental externalities The below-ground carbon stock of NT and GM had an economic value of €0.61 and €0.45 ha -1 y -1 , which is 0.02% and 0.01% of the total annual gross revenues. This potential additional income did not change NPV for both treatments (Table 4-4). The economic value using the carbon price of the EU Emission Trading System (EU-ETS) resulted in 1.40% and 1.06% additional annual revenue for NT and GM, respectively. The changes in NPV under the EU- ETS scenario were also negligible. The externality costs of soil erosion were €121 for CT, €87 for NT and €89 for GM. Although the erosion costs were lowest for NT, the NPV was reduced the most, namely, 73%, while the NPV of CT was reduced by 26% and that of GM by 20%.