D. Zoebl Agriculture, Ecosystems and Environment 79 2000 233–244 239
principle of increasing returns applies as often as that of decreasing returns. In branches of industry where
large initial investments have to be made, such as in the airplane and software industry, marginal costs per
unit produce may fall dramatically as outputs or mar- ket shares increase. This applies the more so, where
so called lock-in processes or pioneer advantages occur Arthur, 1990, as is also noted by software
manufacturer Bill Gates 1995. Consequently, the producer’s margins improve: increasing returns of
input–output function-2
I
apply where costs are cal- culated as combined fixed and variable expenditures
Fig. 5, the accentuated form is chosen for these com- mercial input–output relations where no soils or other
such natural resources are involved.
Modern agriculture is increasingly an industrial pro- cess, with a decreasing share of natural resource ex-
ploitation; hence, the concept of increasing returns also applies to agriculture. de Wit 1979 found in-
creasing returns even in practices carried out by hand labour such as in land amelioration or irrigation. So,
also in non-industrial, low-input production systems, increasing returns to labour inputs may apply at in-
creasing yield levels, where yield is plotted against the combined efforts of reclamation and seasonal field
operations. De Wit’s statement seems to contradict
Fig. 5. Input–output relations at varying shares of fixed inputs. At increasing outputs, increasing returns to combined fixed and vari-
able inputs applies. The effect is gradually reduced at decreasing fixed inputs. Where fixed inputs are zero, constant returns to vari-
able inputs applies Function-3. For an explanation of Function-2
I
and the one in-between, see Section 3.5.
Arthur’s insight that agriculture is for the most part subject to diminishing returns. The paradox can be re-
solved by focusing on the pattern of the single func- tions of the production complex.
Fig. 5 also shows function Type-3, the response curve where fixed costs are zero. In this function, re-
turns to variable inputs are constant. An example is the wage of a farmhand with increasing input of work-
days. Finally, the figure reveals that gain in output at increasing labour inputs is almost constant where
fixed investments are very small or negligible, such as in weeding a crop by hoe by the farmer or his family
members.
4. Some tentative conclusions
What can be learned by biologists, ecologists, engi- neers, economists and other scholars of complex pro-
duction systems by considering these varying patterns of productivity?
Ever since Frederick ‘expansive’ Taylor launched his concept of technical and economic efficiency in
factory work and similar enterprises, the concept has gradually gained such momentum as to have been
cited to define our age Porter, 1997. Not only indus- try and commerce, but also modern agriculture and
bio-industry are shaped by the compelling urge for ef- ficiency. However, whereas technical and economical
efficiency generally can be well defined and quanti- fied, this is less so for the inevitable trade-offs of such
gains in efficiency, as are autonomy and leisure Porter, 1997. In agro-ecosystems, this efficiency can be at
the expense of soil quality, human health, the environ- ment, biodiversity, animal well being and landscape
quality. The development of a conceptual framework and methodology to study the agro-ecosystems’ health
is still in its infancy. However, some tentative con- clusions can be drawn from the examples presented
above: 1. Losses in productivity in one subsystem e.g., sin-
gle leaves may be beneficial for other aggrega- tion levels e.g., the whole canopy. As long as the
trade-offs can be expressed in the same unit caloric energy, N-content or dry matter, the focus of at-
tention may remain in one, or closely related disci- plines. Thus, an interdisciplinary approach is not
required.
240 D. Zoebl Agriculture, Ecosystems and Environment 79 2000 233–244
2. The evaluation of husbandry systems such as dairying or irrigation can evoke conflicting or para-
doxical views. Lack of a uniform way of looking at such husbandry systems is the reason. The as-
sessments of the decrease or increase in efficiency of a system depends often on the role and weight
of internal inputs such as rainwater, soil nutrients and microbial activity. The outputs require external
inputs expressed in money terms, and internal ones without a monetary equivalent. This assessment is
further complicated because the share of internal inputs may depend on the level of external inputs
e.g., sustained, yearly N fertilization may increase the internal seasonal N availability, see Wolf
et al., 1989. A two-pronged or interdisciplinary approach might now be needed, combining the
efforts of agricultural scientists and economists.
3. In all the examples given, the efficiency of input–output relations depends on the initial pres-
ence of, or investment in, certain inputs or growth conditions. The overall input use efficiency de-
pends on the combined variable inputs and natural resources or fixed investments. Again, these com-
bined inputs cannot always be distinguished well, or expressed in a single equivalent, which may
account for misunderstandings between scientists and economists. Decreasing apparent returns to in-
creasing external inputs may occur where a certain output level is obtained without any initial external
inputs, even where the marginal efficiency at in- creasing levels of these variable inputs is constant.
4. For biophysical, technical or economic systems, al- location choices may exist before the beginning of
the production process. How much to invest in a special input or combination of inputs for future
production capacity? A high capacity is only re- alised with favourable production conditions, but it
often means reduced productivity where these con- ditions happen to be unfavourable.
5. In industry and agriculture, the initial investments in capital or efforts cannot be changed at the be-
ginning of the production process: the production capacity is now largely determined. At low invest-
ment levels, more or less constant input–output re- turns are obtained. At high investments, increasing
returns may apply, even where the marginal pro- ductivity arising from the variable inputs remains
constant Fig. 5.
5. Implications for agricultural research and land use policy
