J. Morris et al. Agriculture, Ecosystems and Environment 79 2000 245–257 247
Concern about the socio-economic and environmen- tal sustainability of Fenland has encouraged various
national, regional and local organisations to formulate a strategy for the area which includes the re-creation
of traditional wetland features. This ‘Wet Fens for the Future’ initiative aims to bring together the various
stakeholders to seek common interests and to explore practical and achievable means of promoting the fen
programme.
In this context, the following case study of Fen- land based on Morris et al., 1996a is a microcosm
of a more general and increasingly common global challenge of how best to reconcile the conflicts of
interests between agriculture, environment, rural livelihoods and the general public good. The issues
and approaches described in the case are consid- ered therefore to have relevance beyond the specific
circumstances of the English Fenland.
2. Aim
The broad aim of this paper is to examine the likely financial and economic effects of a change in land use
in the Fenland of eastern England associated with the re-creation of the fens, particularly in the form of wet
grassland, as a means of achieving environmental en- hancement in otherwise intensively farmed areas. The
purpose is to define the hydrological requirements of fen-type habitats and attempt to reconcile these with
farming and other landuse of varying intensity. The paper also seeks to determine the order of financial in-
centives which may be necessary to encourage farmers to switch to alternative land use.
3. Methodology
3.1. Hydrology Agricultural grassland was once an important fea-
ture of Fenland providing much of its nature conserva- tion and landscape interest. The current hydrological
infrastructure of the region would permit the restora- tion of such grassland and would allow changes to
be made to relatively small hydrological units without major effects elsewhere in the catchment. Much of the
area, which would naturally be a freshwater marsh, is currently pump-drained. Water-levels could be raised
simply by altering the current management of pumps. Several large rivers which drain surrounding upland
catchments cross Fenland as embanked high-level car- riers Darby, 1909; Summers, 1976. Water from such
water courses could potentially be used to supplement created grassland systems in summer. This paper does
not deal with the restoration of swamp communities, which historically may have been the natural vegeta-
tion type over much of the area, as the changes to hy- drological infrastructure needed to achieve this would
be much more far reaching.
Different land uses, whether for agriculture or nat- ural habitats, require different water regime require-
ments. The definition of the hydrological conditions necessary for the creation of grassland communities
is the first stage in evaluating a scheme’s feasibility. Figs. 2–4 summarise the water regime requirements
of three contrasting grassland communities as defined by the National Vegetation Classification Rodwell,
1992. The quantified regimes were derived from pub- lished information on these communities Gowing and
Youngs, 1997. These conditions were used to deter- mine the agricultural practices and land use which
could be sustained in the event of a reversion from arable to grassland systems in Fenland.
MG7 is a productive grassland dominated by peren- nial ryegrass Fig. 2. Management is usually through
intensive grazing through most of the year with the annual addition of nutrients, in particular, nitrogen.
No additional water is necessary, though yields are in- creased if summer drought can be avoided. This com-
munity is commonly found throughout the country where cattle are grazed on improved permanent pas-
tures and it is readily recreated on agricultural land by sowing the principal component grass, namely peren-
nial ryegrass Lolium perenne L..
MG8 is a flood pasture or water meadow with very species-rich flora Fig. 3. It is of high conservation
value and requires watertables to be managed artifi- cially, usually with a dense ditch network and an ex-
ternal water supply. Such conditions could be created in Fenland if current management practices were to
be altered. Vegetation management is by summer grazing, or hay-cutting in June with aftermath graz-
ing by sheep or cattle. This is a scarce community found on some chalk streams in South England and
on peat in the Somerset Levels. It is now absent from
248 J. Morris et al. Agriculture, Ecosystems and Environment 79 2000 245–257
Fig. 2. Water regime requirements for MG7 plant community.
Fenland, but is the target of a habitat creation initia- tive at Wicken Fen, Cambridgeshire Friday, 1997.
Few case studies are available to demonstrate whether the community can be restored to previously arable
land, but some success has been achieved with related vegetation types McDonald, 1993. For illustrative
purposes, boxes have been drawn on Fig. 3 to indicate the periods suitable for grazing and breeding waders.
MG13 is a species-poor inundation grassland dom- inated by creeping bent grass Agrostis stolonifera L.
Fig. 4. It has little botanical value but can provide good conditions for breeding waders and wintering
wildfowl. No fine control of water levels is required. This community depends on inundation from flood
events during the spring. Management consists of cat- tle grazing whenever soil is firm enough to support
them. It can still be found in some parts of Fenland such as the Ouse Washes Reserve, Cambridgeshire
and being a less species-rich community than MG8 is relatively easy to restore on former arable sites if the
appropriate hydrology is imposed. 3.2. Economics of alternative farming systems
The financial and economic feasibility and conse- quences of a move from existing agricultural land use
and farming systems to that based on wet grassland habitats were assessed. In order to do this, current
practices for a range of typical Fenland farms were compared with those for various alternative wet grass-
land farming systems. This was done by drawing on the type of management prescriptions designed to pro-
mote environmentally beneficial land use within the ecologically similar Broadlands ESA which lies to the
east of Fenland. The effects of changes in land use and farming practice on farm income and added-value to
the national economy were assessed. The likely mag- nitude of incentives required to encourage a switch to
J. Morris et al. Agriculture, Ecosystems and Environment 79 2000 245–257 249
Fig. 3. Water regime requirements for MG8 plant community.
wet grassland systems were identified, together with the circumstances which might favour farmer partici-
pation in a land use conversion programme.
3.3. Policy options and scenarios Five scenarios which reflect different combinations
of policy conditions and farming systems were iden- tified and used to examine the financial and economic
impact of land use change in Fenland. These provided a framework for a financial and economic analysis
of land use alternatives, ranging from existing arable farming systems to livestock rearing and fattening sys-
tems of varying intensity.
3.3.1. Scenario 1 — current situation Scenario 1 assumes the continuation of existing
farming systems under the prevailing agricultural pol- icy framework. The dominant agricultural system of
the Fenland represents a distinct type of farming based on intensive cash cropping. The majority of land is
classified as Grade 1 or 2. Data from the regional farm business survey Mur-
phy, 1996 were used to determine current enterprises, expenditure and income for an ‘average’ size Fen
arable farm. Two other typical farm models were iden- tified, which reflect farms of differing size, structure,
land capability, enterprise combination and productiv- ity. These three models were identified as Scenario 1a,
1b and 1c Table 1.
Scenario 1a represents the average Fenland arable farm model which covers 130 ha and follows a typi-
cal rotation of winter wheat, oil seed rape, maincrop potatoes, sugar beet, field beans and set-aside.
Scenario 1b represents smaller farms size 65 ha with relatively lower land use intensity and profitabil-
ity. It is typical of those on the poorer ‘skirt’ or de- graded peat soils for which profit is relatively low and
variable. Average yields are lower than under Scenario 1a. Typical rotations are based on winter wheat, sugar
beet, peas, beans and set-aside.
250 J. Morris et al. Agriculture, Ecosystems and Environment 79 2000 245–257
Fig. 4. Water regime requirements for MG13 plant community.
Scenario 1c is representative of those in the top 10 performing farms in Fenland size 525 ha. Profits are
consistently high with the majority of land classed as Grade 1. Marginal land is usually down to set-aside.
Rotations are predominantly based on root crops and field scale vegetables such as carrots and onions with
cereals as a break crop.
Table 1 Farm size and cropping patterns by typical fen farms
a
Scenario 1a Scenario 1b
Scenario 1c Average farm
Marginal farm Intensive farm
Farm size ha 130
65 525
Crops: of farm area Wheat
49 38
39 Other combinable crops
b
16 20
10 Potatoes
8 13
Sugar beet 18
35 22
Vegetables 7
Set aside 9
7 9
a
Based on Regional Farm Business Survey sources, Agricultural Economics Unit, Cambridge University.
b
Oil seed rape, peas, beans.
3.3.2. Scenario 2 — free market Under Scenario 2, Government support to agricul-
ture, such as area payments and guaranteedprotected prices have been removed. Prices have been adjusted
to those likely to prevail in a free market with un- restricted international trade. The scenario considers
the value-added by existing farming systems under
J. Morris et al. Agriculture, Ecosystems and Environment 79 2000 245–257 251
these revised price conditions. In practice, however, a change in prices towards world market levels is likely
to result in changes in the pattern and structure of farming.
3.3.3. Scenarios for wet grassland 3.3.3.1. Scenario 3.
This scenario assumes that per- manent grassland is grazed intensively by sheep and
beef from midlate March to midlate November and grass conservation takes place 1 cut silage. It is based
on the management prescription contained in Tier 1 of the Norfolk Broads ESA agreement Ministry of Agri-
culture Fisheries and Food, MAFF, 1992. This habitat is consistent with the MG7 community. From an agri-
cultural perspective, drainage is classed as ‘good’ the watertable lies more than 0.5 m from the ground sur-
face for more than 80 of the grazing season, Dun- derdale and Morris, 1996. Nitrogen application is
restricted to 125 kgha. Farmers receive subsidies for suckler cows, beef and sheep subject to an overall
maximum stocking rate of two livestock units per ha. Quota to produce livestock are available from national
reserve as part of arable reversion scheme.
3.3.3.2. Scenario 4. This scenario assumes interme-
diate grassland management. The habitat is consistent with the MG8 plant community. The management
prescription set out under Tier 2 of the Norfolk Broads ESA agreement MAFF, 1992 applies. Hay instead
of silage is cut and grazing is prohibited between November–March inclusive. The maximum nitrogen
application rate is 44 kgha. The following assump- tions have also been made regarding intensity of land
use: •
agricultural drainage status deteriorates to a ‘bad’ condition watertable depth 0.3 m from ground
surface for 50 grazing season and 0.5 m for 80 of grazing season Dunderdale and Morris,
1996; •
beef suckler and ewe subsidies are available as under Scenario 3; and,
• extensification subsidies for suckler cows apply
assuming overall stocking rates are below 1.4 livestock units per ha.
3.3.3.3. Scenario 5. Scenario 5 assumes that grass-
land is maintained in a very wet condition for much of the year. This scenario is similar to that of ESA Tier 3
pertaining to wet grassland with retained high ground water levels. The resultant habitat is consistent with the
wet grassland community of MG13. The management prescriptions set out under Tier 1 and 2 apply together
with the further restriction that land use is confined to the summer grazing of store cattle and the application
of fertiliser is prohibited. Grazing is restricted to the period between late May and the end of October be-
cause of ‘very bad’ agricultural drainage watertable depth 0.3 m from ground surface for 50 of graz-
ing season Dunderdale and Morris, 1996.
3.4. Financial and economic analysis of agricultural systems
3.4.1. Budgeting and pricing methodology Analysis of the financial and economic performance
of each of these scenarios followed a common format. Two farm perspectives and two pricing perspectives
were taken. With respect to the former, a whole farm budget was compiled for each scenario showing the
average annual income and expenditure and resultant net return per ha for the farm as a whole the lat-
ter accords with the UK farm management accounting convention of Management and Investment Income
MII. Variable costs are based on standard regional estimates which reflect local yield performance. Fixed
costs are based on regional farm management survey sources Agro Business Consultants, 1996; Murphy,
1996; Nix, 1996. In the case of arable farms, fixed costs are based on data for Fenland farms, whereas
for livestock, fixed cost data are drawn from livestock rearing and fattening farms in various parts of the
country.
A partial budget was also compiled for each sce- nario showing the extra income and expenditure and
net margin per ha associated with substitution of farming activities at the margin, without changing the
predominant farming system. Some changes in labour requirements and operating costs of machinery occur
but the majority of fixed costs on the farm remain unchanged.
With respect to prices, two perspectives were taken for farm outputs. Financial prices were used to reflect
the prices paid and received by farmers, including rel- evant taxes and subsidies, such as area payments and
livestock subsidies. Medium term Year 2000 price
252 J. Morris et al. Agriculture, Ecosystems and Environment 79 2000 245–257
estimates were used which reflected the continuing de- cline in real prices for farm output with the exception
of beef prices which have recently been depressed by BSE.
Economic prices were used to reflect the value of agricultural inputs and outputs to the national economy
once the costs of support have been removed. Adjust- ments to remove Government subsidies followed the
methods advised by MAFF 1993 for the appraisal of flood defence projects in cases where reduced stan-
dards of drainage result in permanent reductions in farm output. This involves reducing the financial com-
modity prices received by farmers inclusive of sub- sidies by specified percentages according to crop or
livestock type e.g. 10 in the case of wheat, and 35 and 25 for beef and sheep, respectively to reflect,
somewhat crudely, the cost of subsidies provided by the Government.
Although the latter method is currently used by MAFF, an alternative definition of economic prices
is to value farm commodities at their international world market equivalent prices net of marketing and
Table 2 Whole farm budgets for Fenland farming systempolicy combinations
Financial prices £ha per year 1996 values excluding agri-environment payments
Current situation
Free market
Management agreements
a
Scenario 1a
1b 1c
2a 2b
2c 3
4 5
Gross output 1297
1059 1856
1039 800
1653 900
412 176
Variable costs 405
315 574
429 333
598 241
147 94
Gross margin 892
744 1282
610 467
1055 659
265 82
Total fixed costs 717
689 1042
717 689
1042 595
420 300
Net return
b
175 55
240 −
107 −
222 13
64 −
155 −
218 Change in net returns compared to Scenario 1a
− 111
− 330
− 393
Economic prices £ha per year 1996 values excluding
agro-environment payments Net return
a
76 116
76 116
− 213
− 271
− 280
Change in net return compared to Scenario 1a −
289 −
347 −
356 Typical environmental payments to
farmers
c
£ha per year 130–230
250–300 350–400
a
Assumes MAFF economic adjustment factors. Use of international border prices would give economic net returns equivalent to free market scenario, subject to cautions expressed in text.
b
Net return based on Management Investment Income.
c
Based on ESA Tier 1, 2 and 3 payments for Scenarios 3, 4 and 5, respectively. These payments can be added to the estimated financial net returns and economic net returns to derive net returns inclusive of environmental payments and benefits, respectively. For example,
farmers switching from Scenario 1 to 5 would receive payments of about £ 400ha generating a net return of £ 182ha, and a change in net return of £ 7ha compared to Scenario 1a. In economic terms, net revenue would be £ 120ha inclusive of environmental benefits, and
change in net revenue would be £ 44ha. The latter uses environmental payments to indicate the economic value of environmental benefits.
transport costs associated with importing or export- ing commodities. These economic prices would ap-
proximate prevailing under ‘free market’ conditions with unrestricted international trade. In reality, how-
ever, the world market for farm produce is a resid- ual market in which prices largely reflect intervention
and protectionist policies of national governments. For these reasons, estimates of economic prices require
very cautious interpretation. The analysis used 1996 values throughout.
4. Analysis and results
