A consistent valuation and pricing framework for non-commodity outputs: Progress and prospects

The non-commodity outputs of multifunctional agriculture are richly detailed in terms of type, quantity, quality, and accessibility to demanders. An ideal valuation and pricing framework must be sensitive to these details, while dealing consistently with programs varying widely in scale and scope. A consistent valuation and pricing framework is outlined, in which multifunctional agriculture programs generate values (not directly, but via effects that modify the quantity and quality of valued services), and these values (reflecting quantity, quality, and location of services produced) are implemented at the farm level as green prices. Economic valuation methods for non-commodity services are introduced, the empirical literature is summarized, methods of generalizing from that literature are discussed, and the current state of empirical knowledge is assessed. Some strategies are suggested for systematically assessing the economic value of non-commodity outputs of agriculture, and some principles for effectively implementing MFA policy at the farm level are offered. (c) 2006 Elsevier B.V. All rights reserved.