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<p>This paper presents an environmental cost–benefit analysis (CBA) comparing organic and non-organic dairy production in Iceland over three decades. Environmental life cycle costing (ELCC) serves as the foundation for the aggregate cost framework, encompassing investment, operations, maintenance, and environmental externalities. Greenhouse gas emissions are integrated as an external cost, monetized according to future damage costs based on assumed trajectories of the shadow price of carbon. Net present value (NPV) and benefit–cost ratio (BCR) indicators reveal all systems as unprofitable over thirty years without subsidies. Depending on the discount rate, the BCR for organic dairy and beef production ranges from 0.55 to 0.72, with NPV between (-2.8) and (-1.1) million euros, and the BCR for non-organic dairy and beef production ranges from 0.50 to 0.86, with NPV between (-4.7) and (-1.2) million euros. Greenhouse gas emission costs constitute 16% of total life cycle costs for organic farms and 20% to 31% for non-organic farms, respectively. Across three discount rates, the LCC and ELCC per kg of fat and protein corrected milk (FPCM) from organic production ranged between €0.58–1.01 and €0.67 – 1.26, respectively. The LCC and ELCC per kg of FPCM from non-organic production ranged between €0.33 – 0.80 and €0.43 – 1.05, respectively. Although Iceland’s agricultural framework aims to promote organic agriculture, the current subsidies given to beef and dairy farming provides greater benefit to non-organic practices. With higher costs per functional unit and potential to enhance biodiversity and ecosystem services, the organic beef and dairy sector could benefit from restructured economic incentives.</p>

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An environmental cost–benefit analysis of organic and non-organic dairy and beef production in Iceland

  • 期刊论文

  • 发表日期：

    2025年12月29日

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  • Vincent Elijiah Merida,
  • David Cook,
  • Ólafur Ögmundarson,
  • Sankalp Shrivastava,
  • Brynhildur Davíðsdóttir

摘要

This paper presents an environmental cost–benefit analysis (CBA) comparing organic and non-organic dairy production in Iceland over three decades. Environmental life cycle costing (ELCC) serves as the foundation for the aggregate cost framework, encompassing investment, operations, maintenance, and environmental externalities. Greenhouse gas emissions are integrated as an external cost, monetized according to future damage costs based on assumed trajectories of the shadow price of carbon. Net present value (NPV) and benefit–cost ratio (BCR) indicators reveal all systems as unprofitable over thirty years without subsidies. Depending on the discount rate, the BCR for organic dairy and beef production ranges from 0.55 to 0.72, with NPV between (-2.8) and (-1.1) million euros, and the BCR for non-organic dairy and beef production ranges from 0.50 to 0.86, with NPV between (-4.7) and (-1.2) million euros. Greenhouse gas emission costs constitute 16% of total life cycle costs for organic farms and 20% to 31% for non-organic farms, respectively. Across three discount rates, the LCC and ELCC per kg of fat and protein corrected milk (FPCM) from organic production ranged between €0.58–1.01 and €0.67 – 1.26, respectively. The LCC and ELCC per kg of FPCM from non-organic production ranged between €0.33 – 0.80 and €0.43 – 1.05, respectively. Although Iceland’s agricultural framework aims to promote organic agriculture, the current subsidies given to beef and dairy farming provides greater benefit to non-organic practices. With higher costs per functional unit and potential to enhance biodiversity and ecosystem services, the organic beef and dairy sector could benefit from restructured economic incentives.