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EUROPEAN COMMISSION

AGRICULTURE DIRECTORATE-GENERAL

5 February 2001

A Framework for Indicators for the Economic


and Social Dimensions of Sustainable
Agriculture and Rural Development

1.

Introduction ............................................................................................................ 3

2.

Sustainability Key issues ....................................................................................... 4

3.

Sustainable Agriculture and Rural Development economic and social


dimensions............................................................................................................... 6

4.

Indicators for the economic and social dimensions of sustainable


agriculture and rural development requirements for a set of indicators................. 10

5.

Developing a set of indicators for the economic and social dimensions of


sustainable agriculture and rural development ........................................................ 12

Annex 1: Review of EU policy documents addressing the notion of sustainable


agriculture and rural development .......................................................................... 22
Annex 2: Examples of Existing Indicator Sets................................................................ 27

1.

INTRODUCTION

Sustainability is the main principle of the Declaration of Rio and Agenda 21 established
in 1992 at the United Nations Conference for Environment and Development
(UNCED). The report Our Common Future of the World Commission on
Environment and Development (Brundtland report) had already defined sustainability
in 1987 as a development which meets the needs of the present without compromising
the ability of future generations to meet their own needs (World Commission on
Environment and Development 1987).
According to Agenda 21, the concept of sustainability is multidimensional. It includes
ecological, social and economic objectives. Between these different elements, there is
interdependency. Research results indeed confirm that the relationships are strong,
numerous and complex. Strengthening the economic viability of rural areas is the basis
for providing the means of preserving their social and environmental functions. Social
implications result from the provision of rural employment opportunities, the
diversification of economic activities and the promotion of local products, services,
craft activities and agri-tourism. Preserving environmental quality is also a precondition
for developing a lasting economic potential in rural areas. The ecological integrity and
the scenic value of rural landscapes are key ingredients for making rural areas
attractive for enterprise settlements, as a place to live, and for the tourist and
recreation business.
Economic, social and environmental objectives can to a certain degree develop
synergies. However, they are not always mutually supportive; they even can compete
with each other. Where this is the case, the concept of sustainability refers to the need
to strike the right balance between its three elements. Political choices concerning one
out of these three elements must at least ensure that certain minimum standards with
respect to the other two are observed.
At the Earth Summit of 1992 it was recommended that the signatory states of
Agenda 21 should develop national sustainable development strategies. The Special
Session of the UN General Assembly to Review and Appraise the Implementation of
Agenda 21 (UNGASS) of 1997 reiterated this commitment and set out a deadline for
having such strategies developed by the year 2002.
The Amsterdam Treaty of 1997 makes sustainable development an objective of the
EU. At the Helsinki European Council in December 1999 the Commission undertook
to propose a sustainable development strategy at the EU level as requested by
UNGASS, in time for the Gothenburg European Council in June 2001.
The EU Ministers responsible for Spatial Planning approved at the Informal Council at
Potsdam in 1999 a European Spatial Development Perspective (ESDP) which aims to
ensure balanced and sustainable development of the territory of the European Union.
The Perspective calls for integrated and diversified rural development which ultimately
aims at overcoming dualism between city and countryside. One policy option to
achieve this goal is to secure sustainable agriculture.

The Agriculture Council endorsed in October 1999 an integration strategy which was
presented in December 1999 to the Helsinki European Council, in line with the overall
integration process started by the European Council at Cardiff in June 1998.
The integration strategy of the Agriculture Council follows the direction established in
February 1999 by the Commission Communication Directions towards sustainable
agriculture which had developed the environmental context for the Agenda 2000
proposals and underlined the need for a continuous process of integration and
monitoring of progress (European Commission 1999a).
In January 2000, the Commission presented its Communication Indicators for the
Integration of Environmental Concerns into the Common Agricultural Policy COM
(2000) 20 (European Commission 2000a), following a request of the Agricultural
Council. This communication presented a framework of agri-environmental indicators
with a view to provide the means for monitoring the implementation of the integration
strategy and improving transparency, accountability, as well as to facilitating
evaluation. In discussing this communication the Agricultural Council underlined that it
is important to broaden the approach and to fully cover sustainable development,
which includes the integration of the economic and social dimensions of sustainability.
While taking into account that the three dimensions are intricately linked, this working
document puts the focus on indicators concerning the economic and social dimensions
of sustainable agriculture and rural development. As a general requirement, indicators
have to be policy-relevant. They must provide - at an appropriate spatial level - factual
information, which can guide policy-makers in their decisions while reflecting tradeoffs between the ecological, economic and social dimensions of sustainability.
Indicators should help to identify policy fields where action is needed. They must help
to monitor the impact of policy action and make it visible to the broader public.
2.

SUSTAINABILITY KEY ISSUES

Core issues addressed by the concept of sustainability are the maintenance of a certain
level of capital stocks (natural, human and man-made capital) as well as achieving
efficiency and equity.
Stocks
Sustainable development is about ensuring that a certain welfare level can be sustained
over time. This requires that combinations of various forms of capital stocks are
available for production and consumption (natural, human and man-made capital). It
also means to provide the coming generations with an aggregate capital stock which is
equivalent to the existing one. This rule is known as weak sustainability, which
postulates an indifferent attitude with respect to the composition of the capital stock
being passed on. Fewer natural resources might be considered acceptable, if the lower
quantity is offset by an equivalent capital stock. Weak sustainability implies that
different forms of capital can substitute each other.
In practice, substitutability between the various forms of capital might be limited as it
would be the case, for example, between man-made and natural capital. Those

ecological assets, which cannot be substituted and are essential for human survival or
important for human wellbeing, can be termed critical natural capital. Strong
sustainability requires the conservation of total capital and critical natural capital
(Pearce 1993, Faucheux, S., OConnor, M. (eds.) 1998).
The determination of the critical level of natural capital to be maintained is difficult.
Technological change can alter the degree of substitutability between resources as well
as the welfare level achievable from a given unit of a resource (improvement in
productivity over time). Furthermore, the potential for future uses of a given quantity
of resources is not always predictable. The extinction of a certain species of plant
could deprive future generations of potential benefit achieved from making use of its
genetic code. This implies that natural resources have to be looked at not only from the
perspective of their present use value but also from the perspective of their option
values (the potential for future welfare generation) (OECD 1995).
As it is difficult to measure option values as well as to anticipate the implications of the
interaction between different resources, a precautionary approach is justified in
defining levels of critical natural capital. This implies that the setting of the relevant
levels has to be based on scientific evaluation, the decision-making procedure should
be transparent and it should involve to the extent possible all interested parties. The
measures considered should be, inter alia, proportional to the chosen level, nondiscriminatory in their application, consistent with similar measures already taken, and
based on an examination of the potential benefits and costs of action or lack of action
(European Commission 2000b).
Efficiency
Given that resources are scarce and some of them cannot be substituted for others,
they have to be combined in such a way, that welfare (in terms of an aggregate utility
function) can be maximised over time (efficiency condition). This highlights the
dynamic aspect of the concept of sustainable development (Legg 1999).
An optimal intra-generation allocation is difficult to determine, because mechanisms to
account for the value of resources are often imperfect due to missing markets.
Producers lack the incentives to take into account the full cost of environmental
degradation or the full benefits of the provision of environmental services when making
their production decisions. While a certain outcome can be efficient from an individual
point of view, it can be inefficient from that of society. A socially optimal resource
allocation can be achieved only, if all costs are internalised (OECD 1995).
Internalisation of external effects requires specification and distribution of user rights.
On this basis, private arrangements can lead to satisfactory re-allocations of resources
as long as the number of partners involved is small, the issues are of local importance
and individual behaviour or outcomes can readily be observed. With a high degree of
publicness (i.e. non-rivalry in consumption and limited possibility to exclude free
riders), a sustainable allocation of resources will have to be pursued through policy
instruments established by democratic decision making.
Even more difficult is achieving inter-generation efficiency, given the lack of
knowledge about the development of future demand, the availability of substitutes, and

technical developments. A pragmatic approach can be based only on rectifying current


inefficiencies in combination with applying certain safeguard levels based on
assumptions about future requirements.
Policy decisions concerning the allocation of resources need to take into account the
local, regional, national, and international context. Local decisions can have global
impacts the most obvious example is policies relating to the emission of greenhouse
gases. Interaction between the local and the global level is also a result of trade flows
that can potentially help to equalise differences in resource use pressure across regions
(Legg 1999), for instance by providing substitutes for natural resources in high-stress
areas (for example, in the form of human capital (i.e. know how), inputs or finished
products).
Equity
Allocative efficiency is a necessary but not a sufficient criterion for sustainability. While
resources might be efficiently allocated generating a maximum aggregate welfare,
imbalances might occur with respect to the distribution of welfare gains and costs. This
might be relevant for the distribution of costs and benefits within the present
generation as well as between the present and future generations.
An acceptable inter-generational equity might be achievable by applying the rule that
resources be allocated in such a way that welfare generated today is not at the
detriment of future welfare (the essence of the sustainability-definition in the
Brundtland report). Future generations must have access to sufficient capital stocks,
which gives them the opportunity to generate a level of wellbeing which is comparable
to that of the present generation.
Sustainability requires also intra-generation equity. In more general terms, the equity
requirement postulates that all members of all societies must have access to resources,
which gives them the opportunity to derive a level of wellbeing above a certain
minimum level established by society.
3.

SUSTAINABLE AGRICULTURE

AND

RURAL DEVELOPMENT

ECONOMIC AND

SOCIAL DIMENSIONS

As identified in Chapter 2, the core issues of the concept of sustainability are:

Maintenance (protection, renewal) of a combination of stocks with a view to


sustaining wellbeing

Efficiency of the transformation process (avoiding inefficiency, promoting


efficiency)

Intra- and intergenerational equity1.

There is a strong link between the issue of intergenerational equity and the maintenance of a
combination of stocks, the first being a goal and the other a means to achieve the goal.

Sustainable agriculture and rural development must therefore necessarily address


these issues at the sectoral (agriculture) and territorial (rural areas) levels. In line with
the scope of this paper we restrict ourselves in this document to the economic and
social dimensions of sustainable agriculture and rural development. Furthermore, the
social dimension is restricted in this document to issues closely related to the economic
dimension and does not address wider social topics such as the development of cultural
capital.
The ecological dimension is not covered here as it has been already addressed in the
Communication Indicators for the Integration of Environmental Concerns into the
Common Agricultural Policy COM (2000) 20 (European Commission 2000a).
Despite this, it is visualised in the table below, as a reminder that progress towards
sustainable development requires that the three dimensions of sustainability and their
interrelations are taken into account in the development and implementation of
policies.
As can be concluded from Chapter 2, the concept of sustainability transcends economic
sectors and territories. This implies that sustainability indicators at the sectoral and
territorial level can only show part of the full picture. Looking at such indicators does
not allow drawing conclusions concerning the overall sustainable development.
Indeed, the concept of sustainability - as regards the core issue of maintenance of a
certain combination of stocks over time - explicitly allows for a certain degree of
substitution between resources and a shifting of resources between sectors and
territories.
The issues identified in the table largely correspond to the elements of an OECD
definition of the economic and social dimensions of sustainable agriculture. In
accordance with the general definition of sustainability, the maintenance of sufficient
stocks/resources (natural, human, man-made) to satisfy current and future demand is
considered as an overriding principle.
Different classifications are possible and indeed defendable. The viability of holdings
is classified in the scheme under the economic dimension which refers to the ability of
holdings to generate sufficient funds to sustain their production potential in the long
run. It could, however, also be classified under the social dimension, if the focus is on
the effects that the viability of the farms has on the wellbeing of farm households.
Conversely, the issue of fair standard of living has been classified under the social
dimension, albeit it results from the economic activities of households and could
therefore also be seen as an economic issue.

Stocks

Sustainable agriculture and rural development

Efficiency

Equity

Environmental
Economic
Social dimension
dimension
dimension
(COM(2000)20)
Maintenance of sufficient capital stocks (environmental, man-made, human);
employment, cultural capital, social cohesion
Environmental
Optimum
Maintenance and
efficiency
utilisation of the
creation of
factors of
employment
Covered by
production,
in

Institutional
(COM(2000)20);
particular labour,
efficiency
not taken up in this
increase of
(regulatory
document
agricultural
framework,
productivity
informal
Assurance of the
relationships and
availability of
steering
supplies
mechanisms)
Competitive
agricultural sector
Viability of
holdings
Setting of a reference
Over space:
Over sectors and space:
level as basis for the
Contribution to
Fair standard of
application of the
viability of rural
living for the
Polluter-Pays-Principle/
areas / a balanced
agricultural and
remuneration of
pattern of
rural communities
environmental services
development / the
Over social groups:
Covered by
maintenance of
Equal opportunities
COM(2000)20);
vibrant and active
rural communities
not taken up in this
Ethics:
document
Labour conditions
Ethical production
methods and animal
welfare

In the light of the above-mentioned considerations, one can conclude that sustainable
agriculture maintains sufficient resources (natural, human, man-made) to meet current
and future demands.

The ecological dimension refers above all to the management of natural resources
with a view to ensure that they are available in the future. However, it also includes
issues such as the protection of landscapes, habitats, biodiversity, as well as the
quality of drinking water and air.

The economic dimension relates to the efficient use of resources, the


competitiveness and the viability of the sector as well as its contributions to the
viability of rural areas. Efficient agricultural structures, appropriate technologies as
well as the diversification of income sources for farm households are important
elements of this dimension. Efficiency of resource use is an important basis for the
viability of rural areas.

The social dimension relates here to questions of labour opportunities and access
to resources and services of agricultural households compared to other economic
agents in rural areas. The issues of equal opportunities and societys ethical
concerns regarding agricultural production methods can also be considered as
belonging to the social dimension of sustainable agriculture.

Multifunctionality and sustainability


The concept of multifunctionality of agriculture is based on the insight that agriculture
is not limited to the sole function of producing food and fibres. There are two other
functions to be considered (European Commission 2000c and 2000d):
The environmental function. A vast range of landscape amenities and site-specific
environmental values bears the form and composition of a farming heritage. The
ecological stability of many modern landscapes is shaped by farming, which has
influenced positively and negatively - the evolution of diverse species of wild
flora and fauna. Maintaining the ecological values of landscapes and semi-natural
eco-systems requires in many areas an active stimulation of appropriate land
management activities.
Socio-economic function: Agriculture contributes to the viability of rural areas and
a balanced territorial development by generating employment in primary
production and the supply and processing/distribution chains. It also helps to
maintain the rural infrastructure. In remote and peripheral areas, farming is often
one of only a few economic activities.
The commodity and non-commodity outputs of the farming activity are jointly
produced, i.e. their provision is interdependent. The non-commodity outputs often
have the characteristics of externalities and/or public goods which means that markets
for these goods and services do not exist or do not function well. The result is an
under-provision of such goods (OECD 2000a).
The concept of the multifunctionality of agriculture and that of sustainable agriculture
cover common ground. Both concepts refer to the objectives associated with the
multiple roles of agriculture, including its various market and non-market outputs, as
well as its social and environmental functions.
The accent of the two concepts is, however, slightly different. Sustainability puts
emphasis on sustaining welfare over time and widens the perspective to future
generations. Therefore, it is concerned about capital stocks (being the primary source
of welfare for current and future generations) and the conditions for safeguarding
them. This is to say, sustainability is resource-oriented. In contrast, the
multifunctionality approach is activity-oriented (OECD 2000a). It looks at the
agricultural production process and its contribution to the achievement of a number of
societal goals.

4.

INDICATORS

FOR THE ECONOMIC AND SOCIAL DIMENSIONS OF SUSTAINABLE


AGRICULTURE AND RURAL DEVELOPMENT REQUIREMENTS FOR A SET OF
INDICATORS

Criteria for indicators


Sustainability indicators should help to assess the extent to which sustainability
concerns have been integrated into the Common Agricultural Policy. The indicators
should meet the following criteria:
Policy-relevance
Conceptual soundness
Definition at an appropriate level of aggregation
Effectiveness
Statistical validity
Analytical soundness
Technical feasibility
Cost-efficiency.
Furthermore, indicators should be limited in number and simple and easy to interpret in
order to make them useful for policy-decisions.
Indicators Frameworks
Indicators should be developed in the context of overall frameworks which are capable
of providing information in a comprehensive and consistent way. Two types of
frameworks are generally distinguished2 (OECD 1999a):

Accounting frameworks based on the national accounts approach. This approach


includes natural and social assets in addition to economic ones. Changes in stocks
can serve as indicators as to whether development paths are sustainable.
Contextual indicators can complement this core set of indicators. While accounting
methods are well established, problems with respect to environmental indicators
result from the difficulty to translate monetary figures back into physical
information about stocks and flows.

Frameworks based on physical features. This type of approach is pursued by the


OECDs Driving Force-State-Response (DSR) model. Several versions of this
basic model exist, developed according to specific needs. A refined approach is
pursued by the European Environment Agencys Driving force-Pressure-StateImpact-Response (DPSIR) framework and applied to agriculture in the
Commissions Communication on Indicators for the Integration of Environmental

Other frameworks exist as well, for example frameworks developed to evaluate public policies
(European Commission 1997b).

10

Concerns into the Common Agricultural Policy, COM (2000) 20 (European


Commission 2000a).
Presenting indicators in an overall framework allows structuring the relationship
between different types and aggregation levels of indicators. A simple map of such a
framework is pictured in the following graph:

OUTCOME
INDICATORS

PROCESSES
INDICATORS

SYSTEM
INDICATORS
(Ecological,
economical, social)

RESOURCES
INDICATORS

CONTEXTUAL
INDICATORS
STRUCTURE
INDICATORS

SECTORAL
INDICATORS

It should be noted that this map does not imply a hierarchical structure of indicators.
The map shows that sectoral indicators are only elements of a wider set of indictors.
This also implies that such indicators would have to be interpreted in the context of the
development of a wider set of indicators.
Looking at indicator groups
A preliminary review of experience made with indicator sets already established shows
that lone-standing indicators often do not provide satisfactory information as to
whether developments are actually pointing towards sustainability3. The combined
effects of developments and the need to deal with resulting complexities make it
necessary to look at groups of indicators that include both state and policy (response)
indicators.
The multidimensionality of sustainability suggests also considering indicator groups.
Whereas sustainability requires the maintenance of sufficient stocks in order to meet
current and future demand, a comprehensive picture of sustainability can be given only
if indicators on the quantitative development of stocks/resources are complemented by
those reflecting the quality of resources, the efficiency of their transformation, and the
resulting output and development of demand.

UK, Finland, France, Australia, New Zealand, Canada, Switzerland, OECD. See Annexe 2.

11

5.

DEVELOPING

A SET OF INDICATORS FOR THE ECONOMIC AND SOCIAL


DIMENSIONS OF SUSTAINABLE AGRICULTURE AND RURAL DEVELOPMENT

Following the reasoning developed above, and being aware that sectoral and territorial
indicators are only one element in the assessment of overall sustainability, we suggest
the following structure:

Sustainable agriculture and rural development

Stocks
Efficiency

Equity

Environmental
Economic dimension
Social dimension
dimension
(COM(2000)20)
State and flow indicators on stocks (Quality and Quantity)
(environmental stocks not covered)
Efficiency indicators:
Indicators on
Not covered
employment
Output indicators
(Quality and
Indicators on
quantity)
institutional
efficiency
Competitiveness
and viability
indicators
Over
space:
Over space/sectors:
Not covered
Indicators on the
Indicators on
viability of rural
access to resources/
communities and
services and
the maintenance of
opportunities
a balanced pattern
Social groups:
of development
Indicators on equal
including the
opportunities
agricultural
sectors
Ethics:
contribution
Labour conditions
Animal welfare
indicators

The characteristics and the complexity of the concept of sustainability (multidimensional, global, dynamic) as well as the fact that it reaches out into the future,
make sustainability a concept which gives a certain direction for policy making rather
than serving as a benchmark that could be precisely defined. Whereas it seems difficult
to identify a quantifiable distance of a certain state to quantified sustainability targets,
sustainability indicators should allow to judge whether a certain development
contributes to movement in the right direction. It is well possible that individual
indicators point into different directions. While it would seem desirable to construct
composite indicators for the different dimensions (ecological, economic and social)
caution should be exercised as regards the development of an overall composite
indicator. Indeed, it is the very purpose of sustainability indicators to show that there
are trade-offs between the three dimensions, which requires appropriate policy choices.

12

State and flow indicators on stocks


Since maintaining stocks is at the core of the concept of sustainability (Rechatin et al
1997; Legg 1999), state indicators relating to capital stocks should be at the centre of
a set of sustainability indicators. Indicators of capital stocks are of particular interest,
because capital stocks have to be used in a prudent manner given the uncertainty as
regards the substitutability between different types of capital, the option values of
certain natural resources, the scope for efficiency gains in the transformation process,
and future demand.
Indicators must cover not only quantitative and but also qualitative aspects. State
indicators should be supplemented by flow indicators which explain the changes in the
stocks of various types of capital.
Efficiency, output, competitiveness and viability indicators
The combination of the various types of capital leads to market and non-market
outputs. Efficiency indicators provide the link between capital input and output. As
the result of the transformation process as regards market outputs should be an output
that together with imports can meet demand, indicators for physical outputs have to be
included. Indicators have to relate both to qualitative and quantitative aspects of
output.
A more comprehensive picture is given through combining efficiency indicators with
competitiveness and viability indicators. Only if the sector is competitive and
production factors are sufficiently remunerated, the sectors production potential can
be sustained in the long run. As efficiency is an important condition for maintaining and
creating employment opportunities, employment indicators complement the context.
Also, indicators on institutional efficiency have to be included.
Equity indicators (across sectors and territories)
Equity indicators address different issues. Territorial indicators allow a judgement as
to whether or not economic and social development between rural and other areas is
balanced. Sectoral indicators allow a judgement as to whether or not development
between sectors is balanced. Social group indicators cover the topic of equal
opportunities. Finally, indicators have to be included which monitor issues linked to the
agricultural transformation process such as ethical concerns of society with respect to
production methods. This includes different issues such as labour conditions and
animal welfare.
A comprehensive list of sustainability indicators
The following table takes up the above-mentioned considerations. It proposes two
types of indicators4:

Forestry is not covered, as a comprehensive set of indicators already exists (MCPFE 2000 a). Nonmarket outputs are covered by the ecological dimension of sustainable agriculture and rural
development.

13

Descriptive indicators relating to the state of sustainable agriculture and rural


development. The proposed groups of indicators reflect experiences made with
existing sets of indicators as outlined in Annexe 2. The column Implementation
makes suggestions with respect to the concrete formulation of indicators.
Policy indicators showing how policy measures respond to sustainability concerns.
Most of the proposed indicators have been developed to monitor and evaluate the
different elements of the rural development policy of the CAP.
Not surprisingly, the list of descriptive indicators reveals that many of the indicators
refer to well-know concepts and data sets. Identifying them as key-indicators for
sustainable agriculture re-values them and gives them a new weight in the agricultural
policy debate. This holds in particular for stock indicators. Indeed, the sufficient
renewal of human and man-made capital, together with safeguarding natural capital,
are the essential pre-conditions for agriculture to be able to satisfy human needs now
and in the future generations.
Further work
Further work in addition to the approach presented in this paper could be considered
mainly in four fields:

Descriptive indicators: The list of proposed indicators is not yet comprehensive in


all fields addressed. This holds in particular for the field of quality (output and
demand), social capital and animal welfare.

Policy indicators: Most of the policy indicators proposed so far aim at monitoring
and helping to evaluate the second pillar of the CAP (rural development). It seems
worthwhile to include more indicators related to the first pillar of the CAP (market
support).

By linking the approach presented here to an overall framework of sustainability


indicators, one could show how the sector contributes to overall sustainability and
whether agricultural policy is coherent with other policies such as, for instance,
development policies.

Data needs: On a technical level, whether the relevant statistical data is available to
calculate the proposed indicators at the appropriate spatial level, needs to be
identified.

14

Indicator fields

Related policy indicators1


State:

Average change over previous ten years

Stocks

State:
Number of people employed in agriculture (male,
female)
Age structure of agricultural labour force (male,
female)
Flow:
Evolution of number of people employed in agriculture
(male, female)

Economic and social dimensions


Implementation
Human Capital (quantitative aspects)

Flow:
(all RD programmes) Employment maintained/created on
directly/indirectly benefiting farm holdings and enterprises
(other than holdings), of which women (%), of which
young people (%)
(Setting up of young farmers) Number of assisted young
farmers installed
(Early retirement) Number of assisted exits

Human Capital (qualitative aspects)


State:
Agricultural holders training levels (male, female)

Practical experience, basic training, full agricultural


training

Flow:
Agricultural education and training (including on
alternative production methods)

Stocks

Indicator fields
State:
Fixed assets and stocks in agriculture
Farmers fixed assets outside their ag. core activity
(e.g. tourism infrastructure)
Flow:
Change in fixed assets and stocks in agriculture
Rate of renewal of farm capital (farm level)

State:
-

Flow:
(Training) Number of supported hours of vocational
training

Economic dimension
Implementation
Man made capital

Related policy indicators


State:
-

Net fixed capital formation (gross fixed capital


formation depreciation) + change of stocks
Average farm capital / Gross investment
15

Flow:
Investment aids
Investments supported by aids

Change in farmers fixed assets outside their ag. core


activity (e.g. tourism infrastructure)

16

Economic dimension
Implementation

Indicator fields

Related policy indicators

Institutional
efficiency

Agricultural output (Food and non-food)


Quantity
Quantity
(in energy terms)

Indicator
fields

Energy embodied in output


in petajoule (PJ) (energy
content of feed-grain
deducted to avoid double
counting) 2 (domestic and
import)

Social dimension
Implementation
Regulatory framework,
informal relationships
and steering
mechanisms

Efficiency

Quality
Infringements on
residues/ contaminants
legislation

Organic agriculture

Crops: UAA, UAA in


conversion; animal sector:
Number of farms

Products carrying
registered product
names

For selected products (e.g.


cheeses, meat-based
products, olives)
number/sales/market shares
of products carrying
PDO/PGI/TSG labels

(Investment aids) Gross sales


of assisted quality-improved
products; share of assisted
products sold with quality
labels
(Improving processing and
marketing of agricultural
products) Share of assisted
investment aiming to improve
the nutritive and hygiene
quality of products for human
consumption

17

See also indicators on stocks:


Employment (human capital)

Related policy
indicators

Indicator fields

Economic
Implementation

Related policy indicators

Indicator fields

Social
Implementation

Food demand
Quantity
Quantity

Demand in petajoules (PJ) / Calorie


requirements in petajoules (PJ) 3

Quality
Quality

To be developed

Efficiency (production)

Efficiency

Capital productivity
Labour productivity
Land productivity

Energy efficiency

Gross value added at market prices /


total capital (at constant prices)
Gross value added at market prices /
AWU (at constant prices)
Gross value added at market prices /
UAA (at constant prices)

(Promoting the adaptation and


development of rural areas)
Share of farms enjoying
agricultural improvements
thanks to assisted actions (land
improvement, improved
irrigation, farm/field structure,
more professional farm
management)

Energy embodied in output in petajoule


(PJ) (energy content of feed-grain
deducted to avoid double counting) /
Energy embodied in non-renewable
inputs (fossil fuel and electricity,
fertilisers, pesticides, machinery,
buildings) in petajoule (PJ) (5-year
average to smooth out annual
fluctuations in output values) 4

18

See also indicators on stocks:


Employment (human capital)

Related
policy
indicators

Indicator fields

Efficiency

Value added

Composition of farm
household income
Own resources

Public stocks

Farmers terms of
trade

Economic
Implementation
Related policy indicators
Competitiveness/viability
Farm net value
added / AWU (per
region in
comparison with
EU-average)
Farm net value
added / UAA (per
region in
comparison with
EU-average)
Farm, farm-related,
off-farm income
Net worth (total
assets liabilities)
creation in a given
year / total net worth
(per region)
Public stocks in
quantities and
values
Index of prices paid
(intermediate
consumption) /
Index of prices
received (final
agricultural output)

Indicator fields

Social
Implementation

Related policy indicators

Total CAP-support (price


and other support) / AWU
(per region in comparison
with EU-average) 5
Total CAP-support (price
and other support) / UAA
(per region in comparison
with EU-average) 5

See also indicators on stocks:


Employment (human capital)

19

Efficiency

Economic
Indicator fields
Implementation
Related policy indicators
Viability of the current structure of the sector
Change in own
resources of farms

Financial stress

Change in net
worth: Number of
farms where it is
positive / number of
farms where it is
negative
Debt servicing ratio:
Cash flow (2) +
interest paid /
interest paid

Male / female

Evolution

Average change in
population over
previous ten years

Equity

Population numbers

Related policy indicators

See also indicators on stocks:


Employment (human capital)

Economic
Indicator fields
Implementation
Related policy indicators
Balanced development over space (rural non-rural)
Population

Social
Indicator fields
Implementation
Related policy indicators
Equity over sectors (agriculture rest of rural economy)
Income
Factor income
per person

Gross value added at


factor costs per AWU /
GDP at factor costs per
occupied person

Equity over space (rural areas and rural non-rural) (Social cohesion)
Distribution
income

Migratory balance
Age structure

Indicator fields

Social
Implementation

Poverty rate
For different age
classes in % (male
and female)

Jobless
households

20

of

Ratio income received


by the highest earning
20 % and the lowest
earning 20 %
Share of population
below the poverty line
Share of households in
which no member is in
employment

Skills

Proportion of
population with
above average
education

Early
leavers

21

school-

Share of population
aged 18-24 with only
lower secondary
education

Indicator fields

Economic
Implementation

Related policy
indicators
Balanced development over space (rural non-rural) (cont.)

Indicator fields

Social
Implementation

Related policy indicators

Social groups (over sectors and space)


Education levels
(male/female)
Working hours
(male/female)

Production
GDP

GDP per capita


(possibly PPP)

Share agriculture in
GDP

Gross value added at


market prices
agriculture / GDP at
market prices
Gross value added at
market prices food
industry / GDP at
market prices

Equity

Share food industry


in GDP

Ethics
Labour
conditions (over
sectors)
Share of CAP-support
(price and other support) in
regional final agricultural
production5
Animal welfare
(agriculture)

Employment
Size and structure
of the working
population

Agricultural
employment/ total
(rural) employment
Food industry
employment / total
(rural) employment
Labour pressure

Employed
persons
aged 15 64
Public sector/private
sector employment

(all RD programmes)
Employment
maintained/created on
directly/indirectly
benefiting farm holdings
and enterprises (other than
holdings)

Population aged 5-14/


population aged 5564
22

(Investment aids) Reduction of


exposure to difficult working
conditions thanks to assistance
(Aids for improving processing and
marketing of agricultural products)
Trends in workplace conditions
related to assistance
(Investment aids) Share of animals
on assisted holdings enjoying
improved welfare thanks to assisted
investments
(Aids for improving processing and
marketing of agricultural products)
Share of assisted investments aiming
to improve animal welfare

Unemployment

Unemployment rate
(by age and sex)

23

Equity

Economic
Indicator fields
Implementation
Related policy indicators
Balanced development over space (rural non-rural) (cont.)
Infrastructure

2
3
4
5
6

Number and size of


towns
Distance to urban
centres6
Indicators on
infrastructure and
services: transport,
telecommunications,
health infrastructure

(Promoting the adaptation and


development of rural areas)
Share of holdings/
households/businesses having
access to assisted
telecommunication
facilities/services
Transport/journeys facilitated or
avoided due to assisted actions
(kilometres/hours avoided)
Share of rural population with
access to social/cultural
activities that depend on assisted
facilities
Share of rural accommodation
that has improved due to
assistance

Indicators developed to monitor and evaluate the rural development programmes of the CAP based on Council Regulation (EC) No 1257/1999, Art. 48 and 49 respectively
(European Council 1999b)
Methodology Agriculture and Agri-food Canada
Calorie requirements: FAO methodology
Methodologies: Agriculture and Agri-food Canada, CAPRI energy module
DG Agriculture methodology
Proxy indicator, DATAR INSEE methodology

24

Annex 1:
Review of EU policy documents addressing the notion
of sustainable agriculture and rural development
In bold: Elements referring to the ecological, economic and social dimensions of
sustainable agriculture and rural development
The table below includes direct quotes from established legislation and policy documents
some of which were presented at various phases of the Agenda 2000 reform. Therefore,
the quotes are overlapping in many respects.
Document

References to ecological, social and economic dimensions of sustainable agriculture


and rural development

Treaty of
Amsterdam, Article
33
(Treaty of Rome,
Art. 39)

Objectives for the common agricultural policy:

Agenda 2000 COM


(97) 2000 final

To increase agricultural productivity by promoting technical progress and by


ensuring the rational development of agriculture production and the optimum
utilisation of the factors of production, in particular labour;

Thus to ensure a fair standard of living for the agricultural Community []

To stabilise markets

To assure the availability of supplies

To ensure that supplies reach consumers at reasonable prices.

(p. 26) The Union should make a parallel effort to enhance the economic potential and the
environmental value of rural areas and their capacity to provide sustainable jobs.
(p. 29) [] Food safety and food quality are at least as important. []
[] Of growing importance in this area too are questions of the environmental
friendliness of production methods, and animal welfare considerations. []
Ensuring a fair standard of living for the agricultural community and contributing to the
stability of farm incomes remain key objectives of the CAP. In this context the questions
of differentiation, redistribution of income support among farmers and the preservation of
sustainable farming are gaining importance, not least from the point of view of social
cohesion.
The integration of environmental goals into the CAP and the development of the role
farmers can and should play in terms of management of natural resources and landscape
conservation are another increasingly important objective for the CAP.
The creation of complementary or alternative income and employment opportunities
for farmers and their families, on-farm and off-farm, remains a major aim for the
future, as employment possibilities in agriculture itself fall away. Rural areas are multifunctional, and farmers should be encouraged to exploit all opportunities for rural
entrepreneurs. Last but not least, while recognising the need of all rural areas for
improving agricultural competitiveness and enhancing economic diversification,
agricultural and rural policies have to contribute to economic cohesion within the Union.

25

Proposals for Council


Regulations
(EC)
concerning
the
reform
of
the
common agricultural
policy, COM (1998)
182 final, 18 March
1998

Explanatory Memorandum, The European Model of Agriculture:


(p. 7) It is worth listing here what the main lines of this model should be:

A competitive agriculture sector which can gradually face up to the world market
without being over-subsidised, since this is becoming less and less acceptable
internationally;

Production methods which are sound and environmentally friendly, able to supply
quality products of the kind the public wants;

Diverse forms of agriculture, rich in tradition, which are not just output-oriented but
seek to maintain the visual amenity of our countryside as well as vibrant and active
rural communities, generating and maintaining employment;

[]

Council
regulation
(EC) No 1251/1999
of 17 May 1999
establishing a support
system for producers
of certain arable
crops

Preamble:
(21) Whereas, in order to benefit from the area payments, producers should set aside a
predetermined percentage of their arable area; whereas the land set aside should be cared
for so as to meet certain minimum environmental standards; []

Council Regulation
(EC) No 1254/1999
of 17 May 1999 on
the common
organisation of the
market in beef and
veal

Preamble:

Council Regulation
(EC) No 1257/1999
of 17 May 1999 on
support for rural
development from
the European
Agricultural
Guidance and
Guarantee Fund
(EAGGF) and
amending and
repealing certain
regulations

(14) Whereas, to strengthen incentives to extensify production with a view to improving


their effectiveness in relation to environmental objectives, an additional amount should
be granted to producers who comply with severe and genuine stocking density
requirements; []
(Additional payments) Art 14, []
3. The specific stocking density requirements shall be established:
[] taking account of, in particular, the environmental impact of the type of production
concerned, the environmental sensitivity of the land used for rearing cattle and the
measures which have been implemented with a view to stabilise or improve the
environmental situation of this land.
Preamble:
(3) Whereas according to Article 159 of the Treaty, the implementation of the common
policies is to take into account the objectives set out in Articles 158 and 160 for the
common policy of economic and social cohesion and contribute to their achievement;
whereas rural development measures should, therefore, contribute to this policy in regions
whose development is lagging behind (Objective 1) and regions facing structural
difficulties (Objective 2) []
(6) [] whereas a rural development policy should aim at restoring and enhancing the
competitiveness of rural areas and, therefore, contribute to the maintenance and
creation of employment in those areas
(18) Whereas the aim of Community investment aid is to modernise agricultural holdings
and to improve their viability
(22) Whereas a particular effort is needed to educate farmers in and inform them of
agricultural methods compatible with the environment
(24) Whereas support for less-favoured areas should contribute to the continued use of
agricultural land, maintaining the countryside, maintenance and promotion of
sustainable farming systems

26

(31) Whereas the agri-environmental aid scheme should continue to encourage farmers to
serve society as a whole by introducing or continuing the use of farming practices
compatible with the increasing need to protect and improve the environment, natural
resources, soil and genetic diversity and to maintain the landscape and the countryside
(40) [] Whereas the list of measures should be defined on the basis of experience and
having regard to the need for rural development to be based partly on non-agricultural
activities and services so as to reverse the trend towards the economic and social decline
and depopulation of the countryside; whereas measures to remove inequalities and to
promote equal opportunities for men and women should be supported
(41) Whereas demand from consumers for organically-produced agricultural products
and foodstuffs is increasing; whereas a new market for agricultural products is thus being
created; whereas organic agriculture improves the sustainability of farming activities
and thus contributes to the general aims of this Regulation []
Council regulation
(EC) No 1259/1999
of 17 May 1999
establishing common
rules for direct
support schemes
under the common
agricultural policy

Preamble:
(3) Whereas, with a view to better integrating the environment into the common market
organisations, Member States should apply appropriate environmental measures in
relation to agricultural land and agricultural production subject of direct payments;
whereas Member States should decide on the consequences in the case of environmental
requirements not being observed; whereas Member States should be enabled to reduce or
even cancel benefits accruing from support schemes where such environmental
requirements are not respected; whereas such measures should be taken by Member
States notwithstanding the possibility of granting aid in return for optional agrienvironmental commitments
(4) Whereas, in order to stabilise the employment situation in agriculture and to take into
account the overall prosperity of holdings and Community support to those holdings and
thus to contribute to a fair standard of living for the agricultural community, including all
persons engaged in agriculture, Member States should be authorised to reduce direct
payments to farmers in case []
(7) Whereas the support schemes under the common agricultural policy provide for direct
income support in particular with a view to ensuring a fair standard of living for the
agricultural community; whereas this objective is closely related to the maintenance of
rural areas; []

27

Council strategy on
the environmental
integration and
sustainable
development in the
common agricultural
policy established by
the Agricultural
Council, 12328/99,
28 October 1999

(8) The Council notes the multifunctional role of agriculture from production of food
and renewable raw materials to the stewardship of rural landscapes and the
protection of the environment. Agricultures contribution to the viability of rural
areas is also indisputable [].
(9) Integration of environmental protection and sustainability requirements into
sectoral policies is a key element for successful socio-economic development as well as
for improvement and implementation of environmental policy. []
(11) [] Sustainable agriculture calls for natural resources to be managed in a way
that ensures benefits are also available in the future. It takes into account the
preservation of the overall balance and value of the natural capital stock and the need
for agriculture to be competitive.
(13) Complemented by the contribution of agriculture to the viability of rural areas
these objectives [the objectives of the Treaty of Rome] comprise important economic and
social aspects of the sustainability approach. Agriculture plays an important role in
contributing to the maintenance of employment in rural areas and in the whole food
and non-food production chain.
(15) Integration of the environment into the CAP starts by recognising that a reference
level of good agricultural practices which is dependent on local conditions should be
respected in all agricultural areas of the EU. The general principle is that where farmers
provide services to the environment beyond the reference level of good agricultural
practices, these should be adequately remunerated. Certain methods of agricultural
production, for example organic farming, integrated production and traditional low output
farming and typical local productions, provide a combination of positive environmental,
social and economic effects.
(36) As elements of sustainable agriculture ethical production methods and animal
welfare should be promoted.
(46) It is necessary to deepen and develop further the integrated rural policy by taking into
account the social and economic dimension, encouraging co-operation and dialogue
between actors (environmental authorities, non-governmental organisations, farmers
organisations and public actors) in the pursuit of sustainability and through national
measures. The rural development policy as the second pillar of the CAP seeks to
establish a coherent and sustainable framework for the future of rural areas aiming at
restoring and enhancing competitiveness and therefore contributing to the
maintenance of employment.
(87) [] It is important to broaden the domain of indicators to include multifunctionality
of agriculture and sustainable development.

28

(91) The Council agrees that

Sustainable agriculture ensures that agricultures natural base remains productive and
agricultural production can be competitive in the future and that farming works to
promote positive environmental impact.
[] Agriculture is multifunctional and clearly has effects on the environment and the
rural landscape. Furthermore it has a fundamental role to play in the viability of
rural areas.
Good agricultural practices should be further developed and respected in all areas of
the EU.
Agriculture plays an important role in contributing to the maintenance of
employment in rural areas and in the whole food and non-food production chain.
[]
Agriculture should respond to increasing consumer concern about food safety as well
as food and environment quality []
Economical, environmental, social and cultural services provided by farmers must be
recognised; for these services farmers should be adequately remunerated. In particular,
when farmers provide services for the benefit of the environment beyond the reference
level of good agricultural practices and environmental legislation, they should be
adequately compensated for example through agri-environmental measures being
implemented on a voluntary basis []

Communication from
the Commission:
Directions towards
sustainable
agriculture, COM
(1999) 22 final, 27
January 1999

(p.8) (Introduction) The beneficial use of land and natural resources for agricultural
production has also to be balanced with societys values relating to the protection of the
environment and cultural heritage.
(p. 21) (Environmental elements of the CAP reform under Agenda 2000) Policies are
required to develop EU agriculture on a sustainable path, ensuring an environmentally
sound, economically viable, and socially acceptable European model of agriculture
(p.24/25) (Rural development measures) The tourist potential based on good environmental
conditions of rural areas enables the diversification of economic activities to be
considered; this requires a sustainable and integrated approach in order to meet the quality
requirements of tourists, to improve the situations of local businesses and communities and
to preserve the natural (landscape and biodiversity) and cultural (architecture,
handicrafts, traditions) heritage.
(p. 27) (Compensatory allowances in less-favoured areas) The main objectives remain
broadly unchanged, namely to assure continued farming in the less-favoured areas, to
contribute to the maintenance of a viable rural community, to preserve the landscape
and to promote the continuation of sustainable farming in areas where it is necessary for
the protection of the countryside.

Communication from
the Commission:
Indicators for the
Integration of
Environmental
Concerns into the
Common
Agricultural Policy,
COM (2000) 20
final, 26 January
2000

(p. 6) At a first level, ustainable agriculture involves managing natural resources in a


way which ensures that they are available in the future. This narrow definition of
sustainability in many cases reflects the economic self-interest of farmers.
A broader understanding of sustainability extends, however, to a larger set of features
linked to land and land use such as the protection of landscapes, habitats, and
biodiversity, and to objectives such as the quality of drinking water and air. In this
broader perspective, the use of land and natural resources for agricultural production must
take account of the protection of the environmental and cultural heritage.
Finally, sustainability needs also to reflect societys concerns as regards the social function
of agriculture, the maintenance of the viability of rural communities and a balanced
pattern of development.

29

ESDP (European
Spatial Development
Perspective), agreed
at the Informal
Council of Ministers
responsible for
Spatial Planning in
Potsdam, 1999

Policy options:
13. Promotion of diversified development strategies, sensitive to the indigenous potentials
in the rural areas and which help to achieve an indigenous development (including the
promotion of multifunctionality in agriculture). Support of rural areas in education,
training and in the creation of non-agricultural jobs.
14. Strengthening small and medium-sized towns in rural areas as focal points for regional
development and promotion of their networking.
15. Securing sustainable agriculture, application of environmental measures and
diversification of agrarian land utilisation.
16. Promotion and support of co-operation and information exchange between rural areas.
17. Use of the potential for renewable energy in urban and rural areas, taking into account
local and regional conditions, in particular the cultural and natural heritage.
18. Exploitation of the development potential of environmentally friendly tourism.
19. Maintenance of a basic supply of services and public transport in small and mediumsized towns in rural areas, particularly those in decline.
20. Promotion of co-operation between towns and countryside aiming at strengthening
functional regions.
21. Integrating the countryside surrounding large cities in spatial development strategies
for urban regions, aiming at more efficient land use planning, paying special attention to
the quality of life in the urban surroundings.
22. Promotion and support of partnership-based co-operation between small and mediumsized towns at a national and transnational level through joint projects and the mutual
exchange of experience.
23. Promotion of company networks between small and medium-sized enterprises in the
towns and countryside.

30

Annex 2: Examples of Existing Indicator Sets

UK

Finland

France

OECD

Indicator
Agricultural assets and liabilities
Age of farmers
Percentage of holdings that are tenanted
PSE
Agri-environment payments
Total income from farming
Agricultural workers earnings / manual workers earnings
Agricultural productivity (labour and total)
Agricultural employment
Direct energy consumption
Indirect energy inputs
Area of agricultural land
Rural socio-economic resources:
Share of labour force in primary production
Population of age group 0-4 and share in total population
Pensioners and share in total population
Higher educated inhabitants and share in total population
Population density (various indicators)
Unemployment
Quality of housing
Socio-cultural indicators:
Number of active farmers
Co-operation between farms
Environmentally conscious behaviour
Socio-territorial indicators:
Product quality
Quality of buildings and landscapes
Access to land
Social structures
Value of sales through Direct Marketing
Social services and services related to farming (agro-tourism)
Contribution to employment
Joint use of resources
Perdurability of farm
Imported feedstuffs from developing countries
Training
Number of weeks with heavy work-load
Subjective quality of life
Subjective feeling of isolation
Economic indicators:
Viability
Specialisation
Financial autonomy
Dependency on direct payments
Invested capital
Efficiency
Farm income
Related:
Share agricultural income / total income
Income parity
Farm real estate values
Educational level of farmers
31

Spatial level
Country
Country
Country
EU
Country
Country
Country
Country
Country
Country
Country
Country
Region

Region

Farm level

Farm level

Country
Country
Country
Country
Country

Indicator
Agri-environment payments

32

Spatial level
Country

Sources:
UK:

Ministry of Agriculture, Fisheries and Food, Indicators for sustainable agriculture,


London 1999

Finland: MTT, Agricultural Research Centre of Finland, Susagri, Sustainable Development in


Agriculture: Indicators, Administrative Programmes and Demonstrations, Jokioinen
2000
France: Vilain, L., La mthode IDEA, Indicateurs de durabilit des exploitations agricoles
Guide dutilisation, Dijon 2000
OECD:
-

Environmental indicators for agriculture: methods and results the stocktaking report
contextual indicators: farm financial resources, draft, Paris 2000

Environmental indicators for agriculture: methods and results the stocktaking report
contextual indicators, draft, Paris 2000

33

Australia,
New Zealand

Shadbolt
Canada

Switzerland

Long-term real net farm


income
Real net farm income
Total Factor Productivity
Farmers Terms of Trade
Average Real Net Farm Income
Debt Servicing Ratio
Managerial Skills
Level of Farmer Education
Extent of Participation in
Training and Landcare
Implementation of Sustainable
Practices
Off-site socio-economic
impacts
Age-structure of the
Agricultural Workforce
Access to Key Services
Farm financial equilibrium
Agricultural Production
Efficiency
Manitoba Sustainability
Indicators Initiative
Net farm income
Number, size and type of farms
Food meeting quality standards
Change in net worth
combined with liabilities /
assets
Cash flow (1) / net
investments
Sustainability index

Country and region


Country, type of farming
Country, region
Country, region
Country, region
Country, region
Country, region
Country, region

Country, region
Region
Farm
Region

Region
Region
Region
Farm, region and country

Farm, region and country


Country

Sources:
Australia, New Zealand:
-

Sustainable Agriculture: Assessing Australias Recent Performance, A Report to SCARM of


the National Collaborative Project on Indicators for Sustainable Agriculture, Victoria 1998

Shadbolt, N. M., Morriss S. D.: Financial indicators of sustainability for farming businesses
and families, a conceptual model to relate these indicators to those used for environmental
and social sustainability, Palmerston North 199.

Shadbolt N. M.: Sustainability and environmental capital, Palmerston North 1999.

Canada:
-

Environment Bureau, Agriculture and Agri-Food Canada, Measuring Sustainability with


Indicators, www.agr.ca/policy/environment/sustainability/ performance/indicators

Government of Manitoba, draft set of indicators in the framework of the Sustainability


Indicators Initiative, 1998, http://www.susdev.gov.mb.ca/ indicators/

Switzerland:
-

Bundesamt fr Landwirtschaft, Agrarbericht des Bundesamts fr Landwirtschaft, Bern 2000

34

Pillet G. et al: Apprciation quantitative des externalits de lagriculture suisse, Genve


2000

35

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