From Cumulative Threats to Integrated Responses · 2010-05-05 · From Cumulative Threats to Integrated Responses: A Review of Ag-Water Policy Issues in Prairie Canada 1 Introduction

From Cumulative Threats to Integrated Responses:

A Review of Ag-Water Policy Issues in Prairie Canada Henry David Venema, Director, Sustainable Natural Resources Management November 14-18, 2005

Prepared for the OECD Workshop on Agriculture and Water: Sustainability, Markets and Policies Adelaide and Barmera, South Australia

© 2006 International Institute for Sustainable Development (IISD) Published by the International Institute for Sustainable Development The International Institute for Sustainable Development contributes to sustainable development by advancing policy recommendations on international trade and investment, economic policy, climate change, measurement and assessment, and natural resources management. Through the Internet, we report on international negotiations and share knowledge gained through collaborative projects with global partners, resulting in more rigorous research, capacity building in developing countries and better dialogue between North and South. IISD’s vision is better living for all—sustainably; its mission is to champion innovation, enabling societies to live sustainably. IISD is registered as a charitable organization in Canada and has 501(c)(3) status in the United States. IISD receives core operating support from the Government of Canada, provided through the Canadian International Development Agency (CIDA), the International Development Research Centre (IDRC) and Environment Canada; and from the Province of Manitoba. The Institute receives project funding from numerous governments inside and outside Canada, United Nations agencies, foundations and the private sector. From Cumulative Threats to Integrated Responses: A Review of Ag-Water Policy Issues in Prairie Canada By Henry David Venema International Institute for Sustainable Development 161 Portage Avenue East, 6th Floor Winnipeg, Manitoba Canada R3B 0Y4 Tel: +1 (204) 958-7700 Fax: +1 (204) 958-7710 E-mail: [email protected] Web site: http://www.iisd.org/

Table of Contents Introduction ................................................................................................................... 1 The Canadian Prairies: Biophysical and Socio-economic Context ..............................2 Overview ............................................................................................................................................... 2 Prairie Hydrology, Hydrologic Variability and Drought ................................................................ 4 Palliser’s Expedition, Drought and Historic Climate Variability.............................................................. 4 Paleo-climatic Research ............................................................................................................................. 6 Implications of Future Climate Change ..................................................................................................... 7 Evidence of the Current Adaptive Capacity to Climate Variability............................................................ 8 Prairie Water and Soil Quality ..........................................................................................................10 Agricultural Policy Drivers ...............................................................................................................12 Socio-economic Conditions and Emerging Policy issues ............................................................15 Farm Income ..........................................................................................................................................15 Organic Agriculture, GMO and the Canadian Wheat Board..................................................................19 A Policy Framework for Sustainable Prairie Agriculture ............................................ 23 Integrated Water Resources Management......................................................................................23 Ecological Goods and Services ........................................................................................................26 Observations ................................................................................................................ 30 References.................................................................................................................... 33

From Cumulative Threats to Integrated Responses: A Review of Ag-Water Policy Issues in Prairie Canada 1

Introduction The Millennium Ecosystem Assessment (MA), a four-year study by 1,360 scientists from 95 countries, provides a useful lens for examining agriculture and water resource policy and practice in an internationally significant and vulnerable agro-ecosystem—the Canadian Prairies. The key innovation of the MA compared with other global environmental assessments was its framework: human well-being is ultimately dependent on ecosystem services, variously categorized as provisioning, regulatory and cultural services. The MA identified the acute vulnerability of dryland agro-ecosystems due to the loss of ecosystem services as one of the “outstanding” global environmental problems—particularly in the context of climate change.1 This paper contextualizes the general observations of the MA, with a detailed examination- the Canadian Prairies. In November 2003, the Canadian Senate Committee on Agriculture and Forestry published a report entitled, “Climate Change: We Are at Risk,” concluding that Canadian agriculture will be affected by climate change, and noting that more frequent and widespread drought on the Prairies is expected. The Prairies produce well over half of the total value of Canadian agri-food exports, but are frequently affected by climate-related disasters. The prospect of more frequent and larger droughts afflicting the Prairies only compounds the multitude of physical and economic shocks and stressors with which Prairie socio-ecological systems have had to cope, including:

• stagnant commodity prices and input price shocks (particularly energy); • closure of the American border to beef exports; • further threats to export markets from the introduction of genetically modified

wheat; and • increasing nutrient loads on Prairie water bodies.

Past adaptations to the cumulative stresses in the dust-bowl years of 1930s included distress out-migration, but also federal policy innovations like the Prairie Farm Rehabilitation Administration (PFRA) and the Canadian Wheat Board (CWB). PFRA was established to assist Prairie farmers in recovering ecological resilience that had been lost through poor land management practices which left the Prairies extremely vulnerable to wind and water erosion during the droughts of the 1930s. The CWB was established to buffer Prairie farmers from the vagary of international commodity prices by aggregating and marketing all Prairie wheat and barley production for selling to global markets.

Our basic hypothesis is that, in the face of recent evidence, the Prairies’ agriculture is not sustainable and is in need of policy innovation on a similar scale to the advent of the PFRA and the CWB. We believe existing, nascent market forces that value ecological goods and services—such as organic agriculture and carbon trading—harnessed through focused policy constitute such innovation. First we review the climatologic, hydrologic and economic shocks afflicting Prairie agriculture; and second, we examine federal and provincial ag-water

1 http://www.millenniumassessment.org//proxy/document.356.aspx


policies that pertain to watershed management, and the use of economic instruments to value ecological goods and services—both areas of innovation deemed critical by the MA to reducing agro-ecological vulnerabilities.

The Canadian Prairies: Biophysical and Socio-economic Context

Overview Agricultural exports from the Canadian Prairies are an important source of food and fiber for the global market, and make a significant contribution to the nation’s wealth and balance of payments. In 2001 the agriculture and agri-food sector contributed 8.3 per cent to GDP, accounting for CDN$100 billion in annual retail and food service sales, and about CDN$20 billion in exports.2 The three Prairie provinces (Manitoba, Saskatchewan and Alberta) generally contribute well over half of these totals. The Canadian Wheat Board markets wheat, durum wheat and barley grown on the Prairies. With annual sales revenue between $4 and $6 billion, the CWB is one of Canada’s biggest exporters (and foreign exchange earners). The CWB annually markets about 20 million tonnes of wheat and barley to over 70 countries, and controls about 20 per cent of the international wheat trade.3

Prairie agriculture takes place in a physiographic region known as the Western Interior Basin that comprises the northern portion of the Great Plains ecozone, which comprises essentially the northwestern extreme of cultivable land in North America (see the box in Figure 1).

Figure 1. Cultivated systems (MA 2005).

The natural vegetation of this region is primarily grassland, extending southward from the Boreal Forest into a transition zone of Aspen Grove to Mixed-grass Prairie and Short-grass

2 http://www.cbcglobelink.org/cbcglobelink/country/Canada/cr.htm 3 http://www.cwb.ca/en/about/index.jsp


Prairie, with the northern tip of the True Prairie grassland extending into southeastern Manitoba. The soils of the interior plains are quite fertile, made up of Brown Chernozemic, Dark Brown Chernozemic and Black Chernozemic soils (AAFC-PFRA 2000).

The climatic regimes of the Prairie provinces are classified as cold temperate and sub-Arctic. They range from dry continental type conditions in the southwest to near Arctic conditions in the northeast along the Hudson Bay coastline. Most areas of the Prairie provinces receive their heaviest precipitation from storms fed by moisture flowing northward from the U.S. midwest. Average yearly temperatures are warmest in the south and coldest in the northeastern areas of the Prairies. The western mountain ranges have a pronounced effect on precipitation patterns across the region and on winter temperatures (Herrington et al. 1997).

While the region enjoys predominately sunny skies throughout the year, considerable fall and spring cloudiness occurs due to the oscillation of the migratory storm track across the region. The agricultural regions experience relatively long winters, short summers and low precipitation. Clear skies and warm temperatures generate sufficient growing degree-days for agriculture during the summer. During the period of instrumental record, the available growing degree-days averages about 1,700–1,800 in Manitoba, with Saskatchewan and Alberta receiving, on average, 100–300 less.

Annual precipitation during the period of instrumental record has ranged from 400 mm –600 mm for Manitoba, whereas Saskatchewan (300 mm – 500 mm) and Alberta (300 mm – 500 mm) tend to receive slightly less precipitation. Although this level of precipitation is marginal for agriculture, most of the precipitation falls during the growing season, and typically during the month of June when crops can best use the moisture. Moisture deficits, however, tend to exist in most agricultural regions, ranging from 150 to 400 mm. Extreme weather events such as drought, tornadoes, flooding and hail are also common occurrences throughout the Prairies, although the frequency and severity of these events tend to be regionally variable.

The combination of good soils and—on average—adequate precipitation, results in large and diverse agricultural production. The Prairies produce well over half of the total value of Canadian agri-food exports (Tyrchniewicz and Chiotti 1997). Although grain production has historically been associated with Prairie agriculture and continues to account for the majority of production, in recent years many farmers have begun to diversify into specialty crops (e.g., mustard seed, dry peas and lentils). In areas subject to extreme moisture deficits, extensive irrigation systems have also been developed. According to AAFC-PFRA (2000), 630,000 hectares of agricultural land on the Prairies currently rely on irrigation; almost 500,000 hectares of which are in southern Alberta, producing a wide variety of crops including grains, pulse crops, corn, sugar beets and vegetables.

In summary, the coincidence of favourable soils and a marginal hydro-climatological regime has given rise to large and diverse agricultural economy on the Canadian Prairies during the period of European settlement. The appearance of climate change as a major public policy issue motivates a retrospective of the historic Prairie climate as a potential proxy for the future climate, as well as a survey of the existing research on the projected impacts of climate change.


Prairie Hydrology, Hydrologic Variability and Drought Canada is widely regarded as a water-abundant country—a notion reinforced by maps like the national water poverty index recently published in Scientific American.4 However, this very coarse generalization belies the relative water stress on Prairie agriculture. Global precipitation maps such as that produced by International Water Management Institute (see Figure 2), reveal that although the Canadian Prairies are not as arid as central Asia or Australia, they are one of the major agricultural zones with the least precipitation—viable because the relatively cool temperatures reduce potential evapo-transpiration.

Figure 2. Global precipitation map (IWMI 2005).

Palliser’s Expedition, Drought and Historic Climate Variability

The earliest scientific assessment of the Prairies produced a foreboding assessment of the viability of Prairie agriculture. From 1857 to 1860, Captain John Palliser led a group of scientists into what was then the virtually unknown (to European explorers) territory lying west of what is now Manitoba. Palliser’s group, known as the British North American Exploring Expedition, was charged by the government of the day with exploring, studying and mapping the plains between the North Saskatchewan River and the current American border. They identified a triangular region bounded by the lines adjoining Cartwright, Manitoba; Lloydminster, Saskatchewan; and Calgary, Alberta (now known as Palliser’s Triangle) as arid and unsuitable for settled cultivation. Palliser warned that disaster would befall those who tried to settle the region. A subsequent expedition by Henry Yule Hind reached different conclusions from Palliser’s, probably because of a different geographic focus.

Government policy followed Hind’s recommendations, and the early settlement of the Prairies coincided with an unusual sustained run of moist years from the late 1890s to the early 1900s, with 12 years of average or above-average precipitation. Increased soil moisture reserves provided for good crop yields and led to bumper harvests in 1905 and 1915. The success of harvests in the early years of settlement encouraged further agricultural expansion

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and population growth. Despite the early promise, the 20th century has been punctuated by droughts, such as those in 1906, 1936–38, 1961, 1976–77, 1980, 1984–85, 1988 and 2001–2003 (Godwin 1986; Gan 2000; Wheaton et al. 2005).

Precipitation is the major factor controlling the onset and duration of drought. Inter-annual variability of precipitation and temperature, to a lesser extent, determine the frequency and intensity of drought. Precipitation variability can be a useful indicator of the extent to which an area is prone to drought, with the coefficient of variation (the ratio of the standard deviation to the mean) being the most stable measure of precipitation variability (Longley 1953 in Maybank et al. 1995). Figure 3 depicts the coefficient of variation of growing season precipitation over the Canadian Prairies, and is noteworthy for two reasons:

• The regions of highest precipitation variability coincide quite closely with the extent of Palliser’s Triangle.

• The magnitude of precipitation variability in this area (30–40 per cent).

Figure 3. Precipitation variability map: Coefficients of variability calculated from average precipitation data (1960–2002).

In a special issue of the IDS Bulletin on Climate Change and Development, Ian Scoones (Institute of Development Studies 2004) emphasizes the historical disconnect between the biophysical reality of fragile agro-ecosystems and the techniques and policies intended to manage them. Scoones’ policy prescriptions echo those of the Resilience School of Natural Resources


Management.5 Scoones focuses specifically on the pastor rangelands of Africa. He describes these as regions “where systems are not at equilibrium, where sometimes chaotic, often stochastic, dynamics prevail and where predictability and control are false hopes.” Regions where equilibrium conditions do not apply are described by Ellis (1998) as existing in very large swaths of Africa, where the coefficient of variation of rainfall is more than 30 per cent.

Scoones (2004) recognized that if climatic uncertainty and variability are on the rise due to climate change—creating non-equilibrium conditions like those of the pastoral dryland regions of Africa, then “we must shed our blinkered equilibrium views and solutions and search for alternatives that allow for living with uncertainty.” We argue here that Scoones’ insights also resonate on the Canadian Prairies.

Paleo-climatic Research

Recent paleo-climatic research also indicates that the Canadian Prairies have been subject to high historic climate variability. Current research suggests a sequence of long-term, broad-scale climatic trends, roughly synchronous over wide areas, and their associated ecological responses. Much of the knowledge of post-glacial environments in the Prairies Provinces has been derived from the study of pollen records recovered from lakes and wetlands. There are about 100 paleo-environmental records available, with more from Alberta than the other Prairie Provinces.

At a very generalized level, paleo-environmental records for the Prairies concur in showing a broad three-part division of the post-glacial period. The early part (prior to about 9000 years BP), for which there are comparatively few records, shows a sequence of rapid vegetation changes that reflect post-glacial migration of plants into the region, soil development and landscape response to post-glacial conditions, all of which tend to blur the climate signal. Between around 9000 and about 6000 BP, most records show evidence of aridity, increased salinity and higher than present temperatures, with the Prairie grasslands probably extending up to about 80 km farther north than their present range. After about 6000 BP, increased moisture and probably cooler temperatures are inferred from rising lake levels, decreased salinity and southward advance of the boreal forest margin. This cooler, wetter interval resulted in renewed ice accumulation in the Canadian Rockies and led to the first well-marked Neoglacial advance around 4000 BP. A series of ice advances have occurred in the last 4,000 years, although most glaciers show their maximum advances in the last few centuries,.

These general climate changes include considerably smaller scale variability. For example, within the last millennium there were two broad climate phases: the Medieval Warm Period, ending around the 12th century, followed by the Little Ice Age.6 The paleo-climatic record for the past 1,000 years indicates that periodic and severe drought episodes are common, and that drought conditions prior to Euro-Canadian settlement far exceed anything experienced in the last century (Sauchyn and Beaudoin 1998). The most severe drought of the past 500 years is thought to have occurred between approximately 1791 and 1800 (Harrington et al.

5 See for example Berkes et al. 2003; http://www.resalliance.org 6 A cold period that lasted from about AD 1550 to about AD 1850 in Europe, North America and Asia. This period was marked by

rapid expansion of mountain glaciers, especially in the Alps, Norway, Ireland and Alaska. There were three maxima, beginning about 1650, about 1770 and 1850, each separated by slight warming interval.


1997). Historically, drought has been found to occur every 30 to 50 years, a pattern repeated in the 20th century.

Implications of Future Climate Change

The potential for climate change as the result of global warming is now part of the modern scientific canon, and potential threats to agriculture are also widely understood. A study by the International Institute for Applied Systems Analysis (IIASA), a Global Agro-ecological Assessment for Agriculture in the 21st Century, suggests that climate change will create significant but highly varied impacts on crop production. Developed countries will gain substantial potential, with developing countries losing potential (Fischer et al. 2001). This coarse generalization, however, requires region-specific contextualization. Conventional approaches to estimating agriculture vulnerability to climate change generally use a top-down approach starting with scenarios derived from global circulation models (GCMs), which are in turn used to estimate changes in agro-climatic properties, crop yield impacts and regional economic impacts, and to suggest possible adaptation responses. To date, two relevant GCM impacts studies have been conducted for the Prairies. Sauchyn et al. (2002) used results from three different GCM modelling scenarios (HadCM3, CGCM2 and CSIROMk2b) to estimate future aridity on the Canadian Prairies. Nyirfa and Harron (2001) used the CGCM1 model to estimate the impact of climate change on land suitability for agriculture as it had been applied in previous agricultural adaptation studies in Canada (Bootsma et al. 2000), and is considered to perform well in reproducing present baseline climate characteristics (Hengeveld 2000). The two studies produced broadly similar results.

Although precipitation increases in all the GCM scenarios, this gain is offset by higher temperatures, which increase the potential evapo-transpiration, thus increasing moisture deficits. The moisture deficit (defined by Nyirfa and Harron [2001] as precipitation minus potential evapo-transpiration) for the nominal “normal” period (1961–1990) is shown in Figure 4. The projected moisture deficit for the 2040–2069 period is shown in Figure 5, and reveals an increase in the overall extent of regions affected by moisture stress—the regions of highest moisture deficit corresponds quite closely to Palliser’s Triangle.

Sauchyn et al. investigated a broader range of climate scenarios, but had similar results. The HadCM3 model used by Sauchyn et al. is cooler and wetter than the CGCM1 scenario used by Nyirfa and Harron, the CSIROMk2b is similar to CGCM1, and the CGCM2 hotter and dryer than CGCM1. Sauchyn et al. concluded the climate projections suggest a general increase in dry conditions; the cooler, wetter scenario (HadCM3) merely delays the onset of increasing aridity, whereas the hotter, dryer scenario (CGCM2) reveals a possible desertification risk.

Even in the absence of climate change, based on the proxy-historical record, the Prairies are expected to return to drier conditions in the coming decades. Thus, a natural cyclical drying combined with climate change potentially leaves the Prairies extremely vulnerable to transient climatic variability and extreme weather events in the coming century.

The demonstrated adaptive capacity to historic climatic stress is not heartening in light of projected future climate change adaptation requirements.


Evidence of the Current Adaptive Capacity to Climate Variability

Although the history of Prairie agriculture is characterized by adaptations to climate variability, including the development of drought- and frost-tolerant crops and farming practices that conserve soil moisture, there is considerable evidence more aggressive policies to increase adaptive capacity may be required. The drought of the Great Depression provides a classic example of mal-adaptation; the 1930s drought affected 7.3 million acres and forced the distress migration of a quarter of a million people (Goodwin 1986). This mass exodus did catalyze a major institutional response, that being the formation of the Prairie Farm Rehabilitation Administration and the Canadian Wheat Board. The impacts of subsequent droughts have largely been simply absorbed by a much larger national economy, less dependent on agriculture.7 The 1984–85 drought affected most of the southern Prairies, and cost Canada at least a billion dollars of GDP (Ripley 1988).

In the severe drought year of 1988, agricultural export losses topped $4 billion. Despite assistance payments of over $1.3 billion, Manitoba showed net farm income losses of 50 per cent and Saskatchewan 78 pe rcent, and an estimated 10 per cent of farmers and farm workers left the agricultural sector that year alone (Arthur and Chorney 1989; Harrington and others 1997). Even in 1991, a year of record high wheat production, emergency payments (i.e., above regular assistance and insurance programs) were still in excess of $700 million (Sauchyn and Beaudoin 1998). Recent analysis of the 2001–2003 drought (Wheaton et al, 2005) indicates losses of $3.6 billion and $5.8 billion, in agricultural productivity and gross domestic product respectively, and manifest as the loss of 41,000 jobs in the agricultural sector. Most recently, floods in the late spring of 2005 in Manitoba have devastated yields. Continuous rain through July forced farmers to abandon seeding some fields, while losing other newly germinated fields to drowning. About one-third of Manitoba’s normally cultivated agricultural lands were lost in 2005.8 University of Regina paleo-climatologist Dave Sauchyn makes some rather succinct observations regarding the sustainability of Prairie agriculture given probable historic and possible future climate hazards, they include:

• “The sustainability of Prairie agriculture depends on adaptation to the amplitudes of climate change and variability” (Sauchyn and Beaudoin 1998, p.337)

• “The prairie ecozone is the only major region (in Canada) where drought is a landscape hazard… management of prairie ecosystems and soil landscapes requires an understanding of past and future trends and variability” (Sauchyn et al. 2002, p.247).

• “A policy framework to minimize the adverse impacts of drought and increasing aridity must support adaptation of soil and water management practices to climatic variability” (Sauchyn et al. 2003, p.11).

7 In 1999 about two per cent of Canada’s GDP was derived directly from agriculture. http://www.wd.gc.ca/rpts/audit/wdp/3_e.asp 8 http://www.hpj.com/dtnnewstable.cfm?type=story&sid=15105


Figure 4. Moisture deficit 1961-1990 (source: Nyirfa and Harron 2001).

Figure 5. Projected moisture deficit 2040–2069, (scenario CGCM1; source: Nyirfa and Harron 2001)


Prairie Water and Soil Quality In addition to the severe risk to dryland agriculture posed by climate change, the Millennium Ecosystem Assessment also identified nutrient over-enrichment as a critical global environmental issue. Since 1960, flows of biologically available nitrogen in terrestrial ecosystems have doubled, and flows of phosphorus have tripled, primarily due to applications of synthetic fertilizers.

The current eutrophication (oxygen deprivation) of Lake Winnipeg is a useful integrative indicator of nutrient stresses on the Prairies. Lake Winnipeg is the 10th largest permanent freshwater lake, in area, in the world, and supports the largest freshwater fishery in North America. Rivers flowing into Lake Winnipeg drain a vast swath of the Great Plains encompassing parts of four Canadian provinces (about 80 per cent of the cultivable land on the Prairies), as well as parts of four American states, as shown in Figure 6.

Figure 6. The Lake Winnipeg Watershed (source: LWSB 2005)

Like many lakes in human-dominated ecosystems elsewhere in the world, Lake Winnipeg is currently under increasing ecological stress from a variety of factors including invasive species, erosion and an inverted discharge regime due to regulation for hydropower. Nutrient pollution is currently regarded, however, as the most severe threat to Lake Winnipeg water quality. Figure 7 illustrates a blue-green algae bloom that occurred in the Lake’s north basin in 2001. An even larger bloom was reported in 2005. Algal blooms are a typical ecosystem response to excessive nutrient enrichment, usually nitrogen and phosphorus.


Figure 7. Algal Bloom in Lake Winnipeg North Basin (source: McCullough 2001 in Stainton et al. [2003]). Image derived from AVHRR satellite imagery September 26, 2001. Brown shows low chlorophyll (less phytoplankton); green indicates more chlorophyll (more phytoplankton).

Woods (1999) compared the ecological state of Lake Winnipeg’s south basin to that of Lake Erie’s in the early 1970s. The serious deterioration of the lower St. Lawrence Great Lakes (particularly Erie) prompted extensive research on eutrophication dynamics (including, notably, at the Experimental Lakes Area), and investigation by the International Joint Commission on remediation measures. More recent analyses (Stewart et al. 2000) suggest that on the basis of inflow phosphorus concentration and water renewal time, Lake Winnipeg is significantly more stressed than Lake Erie prior to remediation efforts (Figure 8).

Figure 8. Phosphorus concentrations in inflowing water as a function of water renewal time (sources: Stainton et al. 2003; Laurentian Lakes data from the IJC 1976; Lake Winnipeg data from Brunskill et al. 1980; Patalas and Salki 1992; Stewart et al. 2000).


The cumulative toll on Prairie land resources from agricultural stresses are also telling. In 2000 PFRA released a report entitled, Prairie Agricultural Landscapes: A Land Resource Review (PFRA 2000), which concluded that:

• 50 per cent of lands under annual cropped lands are threatened by erosion and require intensified use of crop residues and permanent cover to maintain soil health.

• 14–40 per cent of soil organic matter (the vital component of the soil fabric, responsible for improving soil structure, tilth, fertility and health) has been lost from Prairie soils since cultivation began.

Prominent Canadian ecologist David Schindler (2001) argues that the interaction of climate change and nutrient loadings from intensive agriculture will have multiple negative impacts on Prairie water resources, including increased risks to human health from pathogenic bacteria and toxic algal blooms. Schindler (2001, p.21) argues, that, “only comprehensive approaches to the conservation and management of the catchments that supply drinking water can prevent major water problems.”

Agricultural Policy Drivers Heightened concern about soil quality, water quality and climate change on the Prairies is concurrent with, and to some degree a function of, liberalization trends reshaping Prairie agriculture. The re-structuring of agriculture in Canada by the federal government since the 1980s is similar to that accomplished by the IMF/World Bank in the structural adjustment of developing world economies. The key instruments in domestic structural adjustment have been WTO compliance efforts, and the North American Free Trade Agreement (NAFTA). Policies reminiscent of structural adjustment adopted in Canada and applied to the agricultural sector include: a focus on production for export; dramatic cuts in government spending; deregulation; measures to attract foreign investment; privatization of government industries and utilities; removal of farm subsidies, price controls and other supports; and implementation of a freely-floating currency.

Between 1991–92 and 1999–00, government spending on agriculture dropped by 52 per cent from the peak of over $6.1 billion in 1991–92 to approximately $2.9 billion for 1999–00.9 According to the National Farmer’s Union (NFU), however, no other policy decision has had a greater negative impact on western farmers’ income than the cancellation of the Crow Benefit, which subsidized shipping costs (see Box 1). The agriculture minister at the time, Ralph Goodale, claimed ending the Crow would:

• help diversify Prairie agriculture; • boost the value-added sectors; and • bring Canada into compliance with international trade obligations to reduce

subsidies. Moving grain to port for export is now a cost borne entirely by the farmer and, on average, is about 25 per cent of the total cost of the farm operation. The NFU claims that eliminating the Crow Rate has devastated grain farmers’ gross incomes—reducing them by as much as 40 per cent through increased rail costs. Simultaneously, the rural rail network has been greatly reduced, and with it the number of grain delivery points. Since the beginning of the 9 AAFC, Farm Income, Financial Conditions, and Government Assistance data Book, various releases, Table C.I.


Box 1: The Crow Rate The Crow Rate was born in the dying days of the 19th century, a compromise between the Canadian government, Prairie farmers and the railway companies. Prairie farmers faced a challenge that was unique to Canada—the vast distances that grain had to travel from the farms where it was produced to the seaports where it could be exported—essential since the domestic market has never been large enough to absorb more than a third of grain produced on the Prairies. In the 1880s, the federal government subsidized CP Rail to the tune of a billions dollars to construct a rail link through the Crow’s Nest Pass into southeastern British Columbia. In return, CP Rail guaranteed a low freight rates for Prairie farmers "in perpetuity," which actually lasted until the early 1980s, when the federal government acted on complaints from the railways that they were losing millions of dollars in potential revenues by subsidizing freight rates to western farmers. In 1983, the federal government passed the Western Grain Transportation Act, which ended the Crow Rate but initiated the Crow Benefit, under which the federal government subsidized the railways directly by $656 million a year to maintain low grain freight rates. However, the railways continued to lobby the federal government for the elimination of any subsidies, because the conditions imposed on them by the Crow Benefit prevented them from maximizing their profits. In the 1980s, the railways were joined in their lobbying efforts by the burgeoning cattle industry, strongest in Alberta, which argued that lower freight rates distorted the market and drove up domestic feed prices. The Mulroney government made a few cautious moves towards eliminating the Crow, but these met by widespread opposition at a time when hanging on to their seats in Western Canada was a political necessity. The Chrétien Liberals finally ended the Crow subsidies. The February 1995 federal budget eliminated the Crow Benefit, giving instead western grain producers a one-time payout of $1.6 billion and a six-year transition fund of $300 million.

1999–2000 crop year, the number of licensed primary and process elevators located in western Canada has fallen from 1,004 to 416, a reduction of 59 per cent.10 Although the railways have captured significant economic efficiency gains (and recorded record profits), farmers have been forced to pay increased costs for trucking, and rural communities have shouldered rising tax burdens associated with increased road maintenance.

Some of the diversification promised by Minister Goodale through the elimination of the Crow Rate did take place—not through a return to relatively low input classical mixed farming, but rather new forms of specialized production as farmers adjusted to new economic realities. Pork and beef production are prominent examples of intensified specialized production. Between 1991 and 2001 Canadian beef exports increased almost five-fold (AAFC 2005b), much of it concentrated in southern Alberta. This unfettered growth came to an abrupt end in May 2003, when the U.S. closed its border to Canadian beef following the discovery of a single case of bovine spongiform encephalopathy (BSE) or “mad cow” disease in northern Alberta. Even if the BSE crisis had not dramatically curtailed beef production and export, climate change and water resource limitations may have placed

hard constraints on the industry (de Loe et al. 2005). Sixty per cent of Alberta’s beef production takes place in the irrigated areas of Alberta, where moisture deficit is highest and projected to increase with climate change (de Loe et al. 2005; Wall et al. 2004). The economic impacts of the BSE crisis (highlighted in Box 2) have been exacerbated by the consolidation and closure of slaughtering capacity in Canada throughout the 1980s and 10 Monitoring the Canadian Grain Handling and Transportation System, Annual Report, 2002–2003 Crop Year, Quorum Corporation, December 2003.


1990s, a trend concurrent with the liberalization forces that reshaped the meat packing industry.

Trends and drivers in the pork industry are broadly similar. For example, in Manitoba, between 1990 and 2000, the number of hog farms has declined more than 50 per cent from 3,150 to 1,450, while the average number of hogs per farm has more than tripled—increasing from 388 head to 1,290 head. Overall hog production has increased rapidly topping 4.8 million in 1999—89 per cent of which is exported. The rapid growth in intensive hog operations is attributed to:

• changes in world grain trade resulting in relatively static volumes of grains being sold at ever declining prices (constant dollars) due to technology improvements;

• loss of the Crow Benefit on export grain resulting in farmers facing the full freight bill and lower (at least initially) feed grain prices; and

• growth in world demand for meat due to rising incomes. This heavy intensification in the hog sector, and its concentration in certain locations within the province, has heightened public concerns regarding the environment, particularly air and water quality, and public health. A broad-based coalition of environmental NGOs charge that hog ILOs (intensive livestock operations) threaten both water supplies and water quality,11 and are particularly opposed to the practice of field application of liquid hog manure, which is very high in nitrates and phosphorus. Noted University of Alberta Ecologist David Schindler warns that the combination of declining streamflows due to climate change, and the concentration of nitrates, phosphates and pathogens from ILOs (some of which produce as much waste as medium-sized cities) will seriously imperil freshwater resources on the Prairies. Recently a citizens’ coalition in Manitoba12 has opposed plans to liberalize regulations governing liquid manure applications, charging that they are in direct conflict with efforts to reduce the volume of pollutants (particularly phosphorus) that enter Lake Winnipeg that are believed to responsible for the appearance of large oxygen-depleting algae blooms, and the lake’s high risk of further eutrophication (LWSB, 2005).

11 See for example: http://www.hogwatchmanitoba.org and http://www.beyondfactoryfarming.org 12 http://www.mbeconetwork.org/news.asp


Box 2: The BSE Crisis A May 21, 2005, report by Leah Janzen of the Winnipeg Free Press captures some of the huge rural and social stress provoked by the BSE crisis, quoting Cliff Graydon a cattle rancher from the Woodmore-area in Manitoba: His voice choking with emotion, Cliff Graydon said he worries the legacy he's worked 49 years to build will be destroyed long before his two-year-old grandson, Coby, is old enough to take the reins. "I've seen my net worth go from something to a minus…In 2004, cattle people took their money out of the bank, they took their life savings to survive. In 2005, we'd better have something more."...Two years ago yesterday, a single cow in an Alberta herd was discovered with mad cow disease or bovine spongiform encephalopathy (BSE). Immediately, international borders closed to Canadian cattle exports and Manitoba ranchers—who traditionally sent most of their animals to the U.S. for slaughter—were left floundering. Today, Manitoba's herd has grown by 30 per cent, but with few local options for slaughter, the province's cattle producers are unable to sell their animals for nearly what they were worth pre-BSE. "I got $54 for a cow this week," said Graydon, who runs a cow-calf and breeding operation 75 kilometres south of Winnipeg. "I've never sold a cow for seven cents a pound, but I did on Tuesday." That same animal would have been worth at least $575 before May 2003…And it's not just cattle producers who are suffering, said Bob Mazer, a New Holland implement dealer with 10 showrooms across the province. Mazer said his livestock equipment sales have dropped by more than 50 per cent since the BSE crisis began…. Mazer said he would like the province to speed up development of new slaughter facilities so ranchers and others in the agriculture business can stop waiting and worrying about the reopening of the U.S. border. "To hell with the border," he said. "We can find new markets and get the job done. Just build those plants." Source: Janzen, L. Farmers plead for help Lack of slaughter facilities hurts beef industry, Winnipeg Free Press, May 21, 2005

Socio-economic Conditions and Emerging Policy issues This section documents the serious cumulative impacts of climate, ecological and economic stresses on the social fabric of agricultural communities, with particular attention to trends in farm income. We then examine the status of organic agriculture as a livelihood strategy consistent with improved farm incomes, ecological stewardship and resilience to climate stress. This section then concludes with a review of government and corporate policy issues that influence the adoption of organic agriculture with particular attention to the recent experience with genetically-modified canola in Canada.

Farm Income

How is the family farm on the Prairies coping with these agro-ecological stresses and, equally important, with severe concurrent economic stress? In short, the answer is with grim determination to hang on. Ninety-eight per cent of farms in Canada are still family-owned and operated (AAFC 2003); however in 2000, 73 per cent of farm income of the average farm family came from off the farm. Low commodity prices are forcing farm families into the stressful existence of combining full time jobs with farm management; many simply cannot afford to go on. Between 1996 and 2001 the number of farms in Canada declined by 10.7 per cent (Martz 2004). A story in the United Church Observer (June 2004) captures the outcome of these cumulative stresses on the social fabric of Prairie communities:


Continuing drought, low grain prices, mad-cow disease, grasshopper infestations, and flu-infected poultry: these are nail-biting times in rural Canada. Some farmers are working two or three jobs to make ends meet. The extra work means they can’t volunteer for church positions and activities. And they have less money to put on the offering plate.“People are cutting back everywhere, including the church,” says Rev. John Lea of the Assiniboia pastoral charge in southern Saskatchewan… Auctions of entire farms are routine now, but the age of the owners is creeping downward to include 40 year-olds, says Lea. The stresses are bursting the entire community and many more families are moving away from small towns to cities. In the last seven yeas more than 500 people, or about one-sixth of the population have left Assiniboia…for farmers like Donna Zimmer, there really is no other choice but to keep on going. “What else can you do?” she says. “I have worked off the farm all of our married life. I’m looking again for work because we are not making it. We’re just hanging on, waiting for something to turn around. (Driver, 2004; 27-29)

The farm income crisis is widely acknowledged in both official policy and farm advocacy circles. A background document to a June 2005 conference organized by the Canadian Agri-food Policy Institute stated, “an indisputable fact is that at the national level, farm incomes have been decreasing in real terms, whether measured since 1970, 1960, or 1950, and whether measured as net cash income, or as net realized income after accounting for depreciation of assets (Tyrchniewicz and Tyrchniewicz 2005).”

Figure 9 compares total farm receipts to farm debt and reveals the widening debt burden faced by Canadian farmers. The stagnation of commodity prices relative to processed food prices explains much of the farm income crisis. Figure 10 shows a comparison of trends since the mid-1970s in bread and wheat prices; corn and corn flake prices, hog and pork prices, and barley and beer prices. In 1975 the farmer received five cents, and the miller and baker 38 cents from the revenue generated from the sale of one loaf of bread. Today, the farmer still receives five cents, while the miller and baker split $1.35.

Figure 9. Total farm debt and farm receipts (source: National Farmers Union, 2005).


Box 3 Canada’s supply management systemIn Canada, milk, eggs for eating, hatching eggs, turkeys and chicken are all produced under supply management systems. Supply management has three basic elements: 1. Production management. Farmers commit to produce set amounts, under quotas. 2. Import controls. The government uses tariffs or other measures to prevent unpredictable inflows of foreign-produced products. 3. Cost-of-production pricing. Canadian officials measure farmers’ costs and set prices accordingly. Supply management provides stability and predictability for farmers and processors; treats farmers equitably with regard to price; and provides Canadians with a guaranteed supply of high-quality milk and poultry products at stable prices comparable to, and usually below, those in the U.S. and other markets. National Farmers Union. Solving the Farm Crisis: A Sixteen-Point Plan for Canadian Farm and Food Security, 2005. Retrieved from the Word Wide Web INSERT-DATE http://www.nfu.ca/briefs/Ten_point_plan_to_end_farm_crisis_EIGHTEEN_FINAL.pdf

The National Farmer’s Union argues that retailers have been using their market power to simultaneously inflate consumer prices and to push down prices to farmers (and to push down wages to workers). In contrast, both Martz (2005) and the NFU note the relative stability of supply-managed dairy, poultry and egg sectors, where marketing boards match supply with demand (Box 3).

Figure 10. Food product and commodity price comparison (Reference).


The NFU goes on to suggest that Canada’s export-driven agricultural trade policy13 has failed the family farm, asserting that if one were to list the agricultural sectors most heavily focused on export (grains, oilseeds and hogs), and the sectors hardest hit by the farm income crisis you would have the same list. In contrast, the sectors that focus on supplying the Canadian market—dairy, eggs and poultry—have largely escaped the crisis. The NFU indicates that while Canadian agri-food exports have expanded five-fold since 1979, family farm incomes have declined over the same period (see Figure 11).

By 1989, the NFU stated that Canada no longer had an agriculture policy as such, but instead had “a trade policy that masquerades as farm policy”14—a very successful trade policy nonetheless. Agri-food exports doubled in seven years from $10 billion in 1989 to over $20 billion in 1996. Inducements to foreign investment have worked rather well also; by 1999 one U.S. transnational, Archer Daniels Midland, owned almost 50 per cent of Canadian flour milling capacity.

13 In 1993, federal and provincial governments set an ambitious target of doubling agri-food exports to $20 billion by 2000. Having accomplished their goal by 1996, well ahead of schedule, federal and provincial ministers pledged to redouble exports to nearly $40 billion (Four per cent of world agri-food exports) by 2005. The National Farmers Union claims the latter goal was actually put forward by the Canadian Agri-Food Marketing Council, a private-sector group that includes representatives of Maple Leaf Foods, Cargill and McCain Foods. 14 “NFU official wants a farm policy; not a trade policy,” Barbara Duckworth, Western Producer, February 2, 1989, p. 60

Figure 11. Agricultural exports vs farm income (Reference).


Organic Agriculture, GMO and the Canadian Wheat Board

In the late 1990s observers of Prairie agriculture anticipated that organic farming, rather than export-oriented grains and oilseeds and continentally-integrated intensive livestock production, would be a major component of diversification anticipated by Minister Goodale at the time the Crow Rate was terminated (Gertler 1999).

Although interest among Canadian farmers in achieving certified organic status was initially strong, Statistics Canada indicates that organic farming is increasingly only slowly. Saskatchewan, the province most impacted by the loss of the Crow Rate, leads the way with 773 of the 2,230 certified organic farms in Canada,15 (about one per cent of all farms in Canada). Between 2000 and 2003 the number of fruit and vegetable farmers claiming to be using organic production methods increased from 640 to 660.16

Agriculture and Agri-Food Canada (AAFC) reports more robust growth nationally in the organic sector, claiming a 15 per cent growth rate annually over the last decade, with (as of 2003) 3,317 certified organic producers, approximately 456 certified processors and 30 certification bodies (many of which are foreign). AAFC reports that the value of the 2003 organic retail market was somewhere between $800 million and $1.3 billion. Projections for 2005 indicated organic retail sales growth may have increased to $3.1 billion. Most Canadian organic products (primarily grains, seeds and flours) are exported to the European Union, the United States and Japan. Other organic exports include processed food and beverages, maple syrup, apples and vegetables.17

The discrepancy between the Statistics Canada and AAFC numbers is likely attributable to plethora of certification systems. In response to pressure from organic producer groups and consumers, AAFC, the Canadian Food Inspection Agency and International Trade Canada formed the Organic Production System Task Force to develop a Canadian organic standard and certification system for effective consumer protection and to meet the December 31, 2006, European Union third-country equivalence list deadline for national organic production systems. On October 7, 2005, a draft Canadian Standard for Organic Agriculture was submitted for approval.18

The increasing profile of organic production is timely for Prairie agriculture policy, both for the price premium organic commodities generally command, and for organic farming’s environmental benefits. Although critics have contested claims that organic agriculture improves environmental sustainability, mounting scientific evidence is dampening their ardour.19

Recently, Pimental et al. (2005) reported the outcomes of a 22-year comparative ecologic and economic analysis of organic and conventional farming systems at the Rodale Institute in Pennsylvania, USA. Corn and soybean yields were similar, however the organic systems consumed 30 per cent less energy, less water and no pesticides. Of particular relevance to 15 http://www.cbc.ca/news/background/agriculture/subsidies.html 16 www.statcan.ca/Daily/English/050428/d050428c.htm 17 http://www.inspection.gc.ca/english/fssa/orgbio/otfgtspbe.shtml 18 http://www.inspection.gc.ca/english/fssa/orgbio/newnou/2005-10e.shtml 19 Notably, The Hudson Institute, an American policy research institute funded by Monsanto, Dow and DuPont, is among the most prominent.


Prairie agriculture, during drought conditions Pimental et al. report that the organic systems produced 30 per cent more corn than the conventional system, primarily because of much improved soil fertility and, in turn, soil moisture conservation. After 22 years, the organic systems demonstrated significantly higher carbon and organic matter and much higher biodiversity (including twice the number of earthworms); according to the researchers, the presence of more natural predators helped reduce damage from insect pests.

The absence of pesticide applications, and the lower energy input costs, also swing the economic analysis in favour of organic despite higher labour costs. Recent energy input cost shocks have had a debilitating effect on the already very weak profitability of Prairie farms and have thus increased the relative economic advantage of organic systems.

Although AAFC is now developing an internationally compatible Canadian certification standard, Canadian agricultural policy is not uniformly supportive. For example, the Canadian Wheat Board, a federal government agency, and the single export marketer of all wheat and barley produced in Western Canada, does not market organic wheat and barley as specific commodities. The CWB has, however, recently introduced more flexibility in allowing organic producers options to market their production independent of the Wheat Board.20

Whether by design or accident, agri-business forces have also played a role in limiting the growth of organic agriculture. The case of Roundup Ready (RR) canola is a particularly interesting case in point. Roundup (glyphosate) is a proprietary herbicide marketed by Monsanto. Roundup Ready canola is a genetically modified (GM) variant that has specific resistance to glyphosate.

The technology pairing (Roundup and RR canola) is marketed as a technology package to promote higher yields and soil conservation since the herbicide minimizes conventional tillage requirements to control weeds (Gertler 1999). Herbicide resistance in weeds and cross-contamination of GM seeds with non-GM seeds are, however, major complicating issues.

Monsanto began selling their RR canola seed in 1996. By 1998, buyers were asking farmers for GM-free certificates to protect the integrity of their product for premium export markets that demanded a GM-free canola. Within several years, however, it became apparent that GM-free canola seed was no longer available because cross-contamination with non GM-canola had become too extensive,21 22. The increasing level of contamination of organic crops led to certified organic farmers abandoning canola as a crop, as it became impossible to guarantee a product free of GMO contamination.

Nonetheless, the market for Canadian canola remains strong; Canada is still the biggest single country producer of canola. About 70 per cent of Canadian canola is GM. The Canola Council23 claims that GM varieties shows benefits to the grower, the industry and the environment from a reduction in the required tillage operations compared to conventional 20 http://www.cwb.ca/en/news/releases/2005/041505.jsp#back 21www.producer.com/articles/20021114/news/20021114news06.html 22 The Agriculture and Agri-Food Canada study, Isolation Effectiveness in Canola Seed Production by R.K. Downey and H. Beckie, disclosed that growers producing certified canola seed in 2000–2001 for the conventional canola market could not prevent genetic contamination of their seed by genetically modified (GM) canolas. The contamination was so severe that the authors recommended that four varieties sold in the conventional canola market be withdrawn or Breeder and Foundation seed sources for the varieties be cleaned up. http://www.saskorganic.com/oapf/pdf/canolastudy.pdf 23 http://www.canola-council.org/overview.html


variety growers, improved soil conservation and reduced herbicide use. Major importing countries include Japan and China, neither of which imposes any labelling restrictions on GM canola. In contrast, the EU does impose labelling restrictions on GM canola, and thereby effectively eliminates this export market for organic producers who cannot acquire certified GM-free canola seed. This fledgling but lucrative market for organic canola producers was destroyed.

On January 10, 2002, the certified organic farmers of Saskatchewan registered a class action at the Court of Queen’s Bench in Saskatoon against Monsanto Canada Inc. and Aventis CropScience Canada (now Bayer CropScience Inc.). They sought compensation for the loss of canola as a certified organic crop, and an injunction to prevent the introduction of GM wheat as a commercial crop. On February 2, 2004, their statement of claim was amended to include compensation for the costs due to GM canola contamination of certified organic crops and land.24

The injunction to prevent the introduction of GM wheat is an interesting feature of the Saskatchewan organic producers’ lawsuit. Although Canada managed to maintain canola export market share despite its GM status, Canada’s international wheat market may be much more vulnerable if GM wheat were introduced.

In May 2004, Monsanto announced it was deferring plans to market Roundup Ready wheat, apparently bowing to intense world-wide anti-GM pressure, however Monsanto has not abandoned plans to eventually market RR wheat in Canada and world-wide25. The Canadian Wheat Board (CWB) opposes the introduction of GM wheat; 87% of customers of Canadian wheat – including the domestic market – currently require GM-free certification. CWB president Ken Ritters was quoted in the Farmer’s Independent Weekly [Rance, 2005, p. 1] as expressing fears that the detection of a single GM-contaminated wheat shipment would abruptly suspend Canadian wheat shipments as the single detected case of BSE case did to beef exports. The CWB position states that GM wheat should not be introduced until the following conditions are met:

• widespread market acceptance; • the establishment of achievable tolerance levels; • the development of an effective segregation system; • the availability of rapid, accurate and inexpensive detection technology; and • a positive cost-benefit throughout the wheat value chain with particular emphasis on

farmer income.

The CWB itself—the single desk export seller of Canadian wheat—is institutionally at risk however (see Box Story 4). The World Trade Organization membership is almost unanimously opposed to Canada’s cooperative strategy for marketing wheat, a position some observers trace to the influence of American-based grain trading giants such as Cargill and ADM, which can not currently access Canadian wheat.26 A CWB report determined that if Roundup Ready wheat were to be released under the same regime as was in place for GMO

24 http://www.saskorganic.com/oapf/pdf/amended-claim.pdf 25 http://www.guardian.co.uk/gmdebate/Story/0,2763,1214066,00.html 26 http://www.albertaviews.ab.ca/ janfeb05/janfeb05goingbytheboard.pdf . It is unclear at present how the December 2005 decision at the Hong Kong ministerial meeting of the WTO will affect the CWB.


canola, contamination of non-GMO wheat could not be prevented. Furthermore, the report stated, “management systems sufficient to achieve and maintain discrete segregation of the Roundup Ready trait in either wheat or canola have not yet been devised, modeled or tested.”27 The National Farmers Union further argues that cross-contamination between RR canola and RR wheat will force the use of additional herbicides to control volunteer Roundup Ready wheat in their RR canola fields and conversely volunteer RR canola in their RR wheat fields.

Organic producers are fundamentally concerned that the inevitable contamination of wheat would result in the loss of wheat as an organic crop. Since wheat is so central to certified organic grain production on the Prairies, they claim that these losses would be catastrophic and include:

• the loss of the livelihoods of all certified organic grain producers; • the demise of their farms; • the loss of the knowledge base which organic farmers sustain and develop; • the loss of future generations of certified organic grain producers; • the loss of Prairie culture which is embodied in family farming; • the loss of rural communities which depend on family farmers; and

27 An Environmental Assessment of Roundup Ready Wheat: Risks for Direct Seeding Systems in Western Canada, by R.C. Van Acker, A. L. Brule-Babel and L. F. Friesen, (http://www.cwb.ca/en/topics/biotechnology/report/pdf/070803a.pdf),

BoxStory 4: The Canadian Wheat BoardThe Canadian Wheat Board was established in 1935 as yet another attempt by the government to stabilize the Canadian grain market. Since 1943, Canadian wheat farmers have been compelled by law to sell their crops only to the board along with barley, which came under the board’s jurisdiction in 1949. The CWB negotiates contracts to sell the grain at a single fixed price it determines. In 1998 its status as a crown corporation changed; now it is run by 15 directors with 10 being elected by western farmers and five being appointed by the government. The government still guarantees to cover any losses the Wheat Board suffers. The greatest loss to date occurred in 1991 when a U.S. export program drove down wheat prices causing a $673.4 million loss. Some farmers think that the board is no longer useful and should be closed, others contend that without the board the price of wheat would widely fluctuate leaving farmers to negotiate their own price. In the middle between these two opinions are many “who believe that pooling wheat and negotiating a common price might be a good idea for some farmers, but that they shouldn’t be forced by law to sell their grain only to the CWB” (CBC 2004). There was a court challenge to the CWB by disgruntled farmers in 1997, which the board survived. Internationally, the U.S. has tried to curb the flow of wheat into that country from Canada by imposing a 3.94 per cent tariff against Canadian wheat exports, which they later raised substantially, and filed a complaint at the WTO. The WTO ruling, however, cleared the CWB of American accusations of unfair trade practices (Canada 2004). Canada. 2004. WTO upholds favourable ruling on Canadian Wheat Board [html]. Retrieved from the World Wide Web May 20, 2005. http://www.news.gc.ca/cfmx/CCP/view/en/index.cfm?articleid=95339 CBC. 2004. Indepth: agriculture: Canadian Wheat Board [html]. Retrieved from the World Wide Web May 20, 2005. http://www.cbc.ca/news/background/agriculture/cwb.html


• the loss to the world food supply of all Canadian certified organic grains grown on the Prairies.28

The preceding sections are intended to give some sense of the key forces and issues that affect the Prairie agriculture. In his review of the prospects for sustainable development on the Prairies, Michael E. Gertler (1999, p.134) observed that, “Agribusiness interests appear to be paramount in the development of new technological packages while basic research on agroecology is neglected. Technologies developed for commercial reasons are then presented as exogenous factor that carry opportunities and challenges. There is little disinterested leadership from the leading institutions. Farmers have a hard time evaluating the competing claims of sustainability. Most go along with what appear to be the winning products, systems, and worldviews.”

Apparently little has changed—the pathway to sustainability through organic agriculture identified by Gertler has only been tenuously pursued; organic agriculture remains highly vulnerable to the further introduction of GM crops that carry unknown economic and ecological risks. Intensified livestock production grew rapidly following elimination of the Crow Rate but created extreme vulnerability to trade shocks such as BSE—a consequence of a hardwired continental trade system—and has increased risks of water quality impairment.

A Policy Framework for Sustainable Prairie Agriculture Having made the case, we believe, that the Canadian Prairies demonstrate the acute environmental and socio-economic vulnerabilities of dryland agricultural systems described by the Millennium Ecosystem Assessment as an “outstanding” global environmental problem, we return to scenarios and policy recommendations developed by the MA and view Canadian Ag-water policy initiatives through this lens to articulate an alternative policy framework for Prairie agriculture.

Integrated Water Resources Management On governance, the key insight from the MA is that a future scenario consistent with improving cultural, provisioning and regulatory ecosystem functions is one in which, “regional watershed-scale ecosystems are the focus of political and economic activity.” Local institutions are strengthened and local ecosystem management strategies are common; societies develop a strongly proactive approach to the management of ecosystems. This MA scenario, “the Adaptive Mosaic,”29 is compatible with principles of Integrated Water Resource Management (IWRM)30 and local watershed management.

28 http://www.saskorganic.com/oapf/ pdf/danish-presentation-11may04.pdf 29 http://www.millenniumassessment.org//proxy/document.356.aspx 30 The Dublin Principles, 1992 articulate the basic principles of IWRM

1. Freshwater is a finite and vulnerable resource, essential to sustain life, development and the environment. 2. Water development and management should be based on a participatory approach, involving users, planners and

policy-makers at all levels. 3. Women play a central part in the provision, management and safeguarding of water. 4. Water has an economic value in all its competing uses and should be recognized as an economic good.

Essentially IWRM includes social, political, economic and environmental aspects of managing water resources in an interdisciplinary manner.


The Global Water Partnership describes IWRM as “a process that promotes the co-coordinated development and management of water, land and related resources in order to maximize the resultant economic and social welfare in an equitable manner without compromising the sustainability of vital ecosystems.” 31

Environment Canada has made a strong institutional commitment to IWRM principles, however federal jurisdiction over Prairie water resources is limited however, and primarily concerns the apportionment of water flows at the Alberta-Saskatchewan and Saskatchewan-Manitoba provincial boundaries. According to the Manager of the Ag-Water Directorate at PFRA, the major IWRM implementation gaps with respect to Prairie water governance are:

• generally poor coordination between Agriculture and Water agencies; they “are often not at the table together”;

• the lack of an updated federal Water Policy (the current one dates from 1987); and • weak federal leadership, facilitation and logistical support, and poor coordination

among the federal departments with partially overlapping jurisdiction over water resources issues (Adkins 2005).

The provinces hold primary jurisdiction of Prairie water resources management, all of which have embraced the goal of watershed-based Integrated Water Resources Management and Governance. IISD recently conducted research on provincial water strategies on the Prairies; the information below is based on that study, which was presented at a Prairie Water Policy Symposium hosted by IISD in September 2005.

Manitoba outlined its commitment to watershed management within the Manitoba Water Strategy, which included two elements directly focused on watershed management.32 The Manitoba Water Protection Act enshrined these commitments in law, and set out a legislative framework by which to implement these commitments related to:33

• developing an integrated water planning and management system focused on the creation of “watershed districts” (subsequently called watershed planning authorities), building on the province’s existing conservation districts and recognizing the importance of planning partners at every level; and

• developing mechanisms for financing water management and planning, including ongoing maintenance and watershed restoration.

Under its Water for Life strategy, Alberta has established a comprehensive watershed planning process through its Enabling Partnerships: A Framework in Support of Water for Life document, whereby management efforts will occur at two levels (all under the auspices of the multi-sectoral Alberta Water Council advisory board):34

31 Jønch-Clausen, Torkil (2004). Integrated Water Resources Management (IWRM) and Water Efficiency Plans by 2005 – Why, what

and how? Global Water Partnership, Technical Committee. 32 Manitoba Conservation. 2003. The Manitoba Water Strategy. Winnipeg, MB, p. 20-23. 33 Manitoba Water Stewardship. 2005. Bill 22: The Water Protection Act (revised after Committee review). Winnipeg, MB, 32p. 34 Alberta Environment (2005). Enabling Partnerships: A Framework in Support of Water For Life, Alberta Environment, Edmonton, AB. p. 3.


• local Watershed Stewardship Groups which work to address local needs—gathering information and implementing beneficial actions to improve and protect their local watersheds on a volunteer basis; and

• regional Watershed Planning and Advisory Councils to build long-term partnerships across larger river basin areas—encompassing several smaller watersheds to share information, report on state-of-the-watershed indicators, and prepare watershed management plans.

The Saskatchewan Water Authority is currently facilitating watershed-planning exercises in seven provincial watersheds (with substantial levels of dedicated staff support), and has developed A Watershed and Aquifer Planning Model for Saskatchewan. This agency will publish a framework for State of Watershed Reporting protocols for monitoring and assessment this year. The planning process utilizes two interrelated committees.35

• Watershed Advisory Committees may contain municipal, First Nation, irrigation district, watershed association,36 and/or conservation area authority37 personnel—who are there to represent their constituents and other residents of the watershed; and

• Technical Committees comprised of government and agency staff who support watershed and aquifer management plan development with background information, an analysis of issues and threats, recommendations for action, responsibilities and accountability measures for plan implementation.

Manitoba’s commitment is strongly based in legislation, while Alberta has outlined a complete framework for the full participation of Albertans—from the local to the regional watershed level taking the form of a nested watershed management approach. Saskatchewan has focused on a practical application of the concept—by setting out a clear process for the preparation of watershed plans, including the provision of dedicated staff support to do so.

It is too early to comprehensively critique the various provincial attempts at IWRM through decentralized watershed planning. However, based on IISD’s analysis of the various provincial programs, we have drawn the following conclusions:

• very few watershed plans have actually been completed within the Prairie provinces; even fewer have been implemented;

• no formal learning mechanisms exist to coordinate watershed-planning techniques among the provinces, nor does any coordination mechanism exist for inter-provincial watershed planning (though this is an important potential niche for federal leadership);

• there is no consensus and no clear direction on:

35 Saskatchewan Watershed Authority (2003). A Watershed and Aquifer Planning Model for Saskatchewan. Moose Jaw, 12 p. 36 The Watershed Associations Act (1978) permits two or more cooperating organizations (typically municipalities) to facilitate planning and development of land and water management activities for multiple environmental, wildlife, and recreational purposes. Available: http://www.swa.ca/AboutUs/Legislation.asp. (Accessed July 5, 2005. 37 The Conservation and Development Act (1978) permits rural landowners to establish a conservation and development area to facilitate the development and assessment-based funding of drainage and water control works. Available: http://www.swa.ca/AboutUs/Legislation.asp (Accessed July 5, 2005).


o the role/type of decision support tools and the degree to which the watershed planning process will be transparent and participatory;

o how the technical capacity requirements for local watershed planning will be met and o the use of economic instruments to finance watershed planning and management.

Additionally, IISD surveyed many of the key water policies on the Prairies in our study of provincial water strategies and identified 141 policy instruments. Of these, 48 were regulatory initiatives, 40 were expenditure initiatives and 52 were institutional initiatives. Only three of the policy initiatives identified could be deemed economic instruments; they were:

• the Manitoba Riparian Tax Credit, a relatively little known program that is consistent with principle of payment for Ecological Goods and Services. The tax credit is designed to encourage farm operators to upgrade their management of river and stream banks and it recognizes those who have already done so. This property tax credit is the riparian zone protection first program of its type in Canada;38

• a dedicated levy on water use for hydropower generation paid by SaskPower (the public-owned power utility in Saskatchewan) to the Saskatchewan Watershed Authority to finance watershed planning and management activities throughout that province; and

• Alberta’s Water Act now permits water allocation rights holders to transfer their licences (independently from their land or projects to which they were formerly attached), creating innovative redistribution opportunities within a fully allocated basin. Also, the Alberta government currently has two research projects underway: a value of water project and a project to evaluate the potential for economic instruments.

At the recent Prairie Water Policy Symposium held in September 2005, IISD observed that the task of achieving IWRM on the Prairies through participatory watershed governance would take decades because it is massively decentralized and expensive, and requires decentralized technical and social capacity that does not exist. Rural electrification and the extension of telecom services across the Prairies are useful analogues, both of which required decades to complete, were never economic in their own right, and required a vast array of new government/community co-management institutions and co-financing options.

Ecological Goods and Services The second major principle espoused by the Millennium Ecosystem Assessment with respect to mitigating the serious environmental vulnerabilities of dryland agro-ecosystems—particularly those exacerbated by climate change—is the increased use of economic instruments to support payment for ecological goods and services (EGS), such as:

• removal of subsidies to agriculture, fisheries, and energy that cause harm to people and the environment;

• payments to landowners in return for managing their lands in ways that protect ecosystem services, such as water quality and carbon storage, that are of value to society; and

38 http://www.gov.mb.ca/finance/esa/riparian


• market mechanisms to reduce nutrient releases and carbon emissions in the most cost-effective way.39

Interestingly, none of the papers commissioned by Canadian Agri-Food Policy Institute (CAPI) for their forum on farm incomes examined the potential for EGS payments to improve farm incomes, to some extent indicative of the marginal status of this concept within mainstream Canadian agricultural policy circles.40

One of the major proponents of EGS concepts in Canada has been the Keystone Agricultural Producers (KAP), a Manitoba-based producer group which has promoted its Alternative Land Use Services (ALUS) concept nationally.41 Under the principles of ALUS, individual farmers would be paid for the maintaining existing natural assets, where a viable alternative exists for converting natural assets into other agricultural uses. ALUS will also provide incentives for landscape improvement. KAP argues that ALUS payments be consistent with WTO green box provisions (and thus non-trade distorting), and compliment the environmental components of the key federal policy initiative, the Agricultural Policy Framework (APF). Although reactions to KAP’s ALUS concept were initially muted, enthusiasm for the concept continues to grow and the Manitoba government has agreed to host an international-level symposium on ecological goods and services programming scheduled to take place in Winnipeg in February 2006.42 AAFC’s research work on EGS concepts thus far has focused on valuating marginal changes in their NAHARP agri-environmental indicator set. The National Agri-Environmental Health Analysis and Reporting Program (NAHARP) was established to help strengthen departmental capacity in the development and continuous improvement of agri-environmental indicators and of the tools that use these indicators in policy development and integrated the environment and the economy.43 The NAHARP indicators (24 in total) fall into 5 broad categories:

• soil quality; • water quality; • agro-ecosystem atmospheric emissions; • agricultural biodiversity; and • eco-efficiency indicators.

Under contract to AAFC, IISD undertook a study examining the feasibility of valuating marginal changes for five indicators:

• risk of water erosion (Soil Quality category); • risk of water contamination by phosphorous (Water Quality category); • GHG emissions (Agro-Ecosystem Atmospheric Emissions category); • wildlife habitat (Agricultural Biodiversity category); and • energy use efficiency (Eco-Efficiency category).

39 http://www.millenniumassessment.org//proxy/document.429.aspx 40 http://www.capi-icpa.ca/farm_income_project/list_papers.cfm 41 http://www.kap.mb.ca/contents.htm 42 http://www.kap.mb.ca/nr_alus_aug2905.htm 43 http://www.agr.gc.ca/csb/rpp/2005/index_e.php?page=8


In principle, such valuation principles could be used to estimate the economic benefits of agricultural policy changes and thus form the basis of EGS benefit calculations. IISD applied impact-pathway modelling expertise developed in earlier power sector externality studies and concluded that direct valuation was only partially feasible. In the case of the soil and water indicators, rigorous application of impact pathway principles requires extensive intermediate hydrologic modelling to translate indicator changes into changes on impacted watercourses. Changes in GHG emissions are possible to valuate at market prices for GHG emissions credits, but infeasible based on full-cost principles because of the perfect atmospheric mixing of GHG emissions, and thus global impacts. Valuation of energy efficiency improvements is straightforward if market prices for energy are used, but intractable from a full cost perspective, as it confronts the same global impact issue that arises with GHG emissions.

AAFC has also embarked on a new project to evaluate the economic benefits of agri-environmental management practices on a watershed-scale. The Watershed Evaluation of Beneficial Management Practice (WEBs) project is a (CDN$5.65 million) national initiative under the APF, in partnership with the provincial governments, Ducks Unlimited Canada and local partners. Water quality is the dominant indicator for assessment within seven micro-watersheds. There is also a strong dialogue with the USDA’s Conservation Effects Assessment Project (CEAP), although CEAP watersheds are typically much larger and as such may be difficult to attribute water quality improvements to particular BMPs.

The WEBs project has several interesting features:

• The flagship WEBs watershed is Manitoba’s South Tobacco Creek, by far the best monitored of the seven micro-watersheds in the study, primarily due to the initiative of a local producer group (the Deerwood Soil and Water Conservation Association). Convinced of the water quality benefits of their micro-catchment treatment activities, Deerwood embarked on a 12-year water quality-monitoring program with only intermittent government support.

• A key rationale for WEBs project is the need to examine the cost effectiveness of an existing and unique AAFC EGS program. GreenCover Canada is a five-year, $110M AAFC project that provides payments to producers for converting environmentally sensitive land to permanent cover for protection from wind and water erosion, riparian zone management and watershed management. GreenCover Canada is in turn envisioned as component of the domestic offset system for GHG emissions.44 Thus WEBs can be interpreted as validation exercise the nascent GreenCover Canada system of EGS payments for (primarily) carbon sequestration.

A major component of the existing Agricultural Policy Framework that currently governs Canadian agri-environmental policy is Environmental Farm Planning (EFP), which focuses on federal-provincial agreements to promote, “Adoption of environmentally beneficial practices in the management of nutrients, pests, land and water, and biodiversity... These actions will also contribute to a cleaner environment, healthier living conditions for all Canadians, and the government’s efforts to meet commitments under the Kyoto Protocol.”45

44 http://www.climatechange.gc.ca/english/newsroom/2005/plan05.asp 45 http://www.agr.gc.ca/csb/rpp/2005/index_e.php?page=8


AAFC acknowledges that although many provinces are currently undertaking Environmental Farm Planning (EFP) through federal-provincial funding arrangements, “additional work is needed to develop a comprehensive and integrated national EFP system.”46

A comprehensive indicator reporting system for EPF activities is also planned, which would track:

• the level of coverage by provincial scans of agricultural land in Canada; • the number of completed EFPs and number of Beneficial Management Practices

(BMPs) adopted by agricultural producers; • the number of hectares of environmentally sensitive crop land converted to

perennial cover and water projects completed by agricultural producers; and • the number of hectares protected through the establishment of wood plants for

habitat enhancement, carbon sequestration, soil protection and riparian protection. However as of October 27, 2005, none of this information was available from any federal or provincial Web site. The significance of WEBs is that its outcomes can assist in ranking the cost-effectiveness and value of various BMPs delivered through the Environmental Farm Planning program (and in principle could be used for valuation of EGS payments). WEBs is still in its infancy, and AAFC is pursuing EFPs without a strong knowledge base on the relative cost effectiveness of the various BMPs.

46 Ibid.


Observations First, one of the “outstanding” global environmental problems identified by the Millennium Ecosystem Assessment—the vulnerability of dryland agriculture to climate variability and change—is on full display on the Canadian Prairies. The inability to cope with repeated drought is particularly worrisome given:

• paleo-climatic evidence that more severe drought episodes were common; and • the likelihood of increased aridity from climate change.

The other side of the hydrologic ledger is also troubling, given the devastating effect of spring 2005 flooding and the climate change projections for increased frequency of such extreme flood events in the context of generally increasing aridity.

Second, the issue of nutrient over-enrichment, identified by the MA as another environmental problem of global concern, is also very well represented on the Prairies in the form of the massive blue-green algae blooms on Lake Winnipeg, which integrates the hydrology and nutrient inputs of essentially the entire Prairie watershed. Lake Winnipeg is by some measures in a worse ecological state than Lake Erie was in the 1970s, when the latter’s degraded condition catalyzed major regulatory interventions to control anthropogenic phosphorus inputs. The third major observation is that the underlying hypothesis of the MA—that human well-being is fundamentally a function of ecosystem services—is very well supported on the face of evidence from the Canadian Prairies. The Prairie socio-ecological system no longer possesses the necessary resilience to climate or economic shock, and farmer frustration with the lack of institutional support to increase their resilience is palpable. Writing in the Winnipeg Free Press on October 29, 2005, Laura Rance evokes the utter desperation felt by Prairie farmers after this year’s harvest (Box 5). The Millennium Ecosystem Assessment also provides some guidance on pathways to Sustainable Development—the importance of local watershed-scale governance, and the increased use of economic instruments to support ecological goods and services. The evidence that these policy innovations are a strong focus on the Canadian Prairies is at mixed at best. All Prairie provinces have made institutional and legislative commitments to watershed-scale IWRM, however co-requisite budgetary commitments have lagged. In the wake of record oil and gas revenues the Government of Alberta recently announced CDN$60 million funding for its Water for Life Strategy; Saskatchewan uses a levy on hydropower production to co-fund its Watershed Authority to the tune of CDN$20 million. Manitoba imposes no such dedicated levy on Manitoba Hydro, the large provincial utility that uses Lake Winnipeg as a massive reservoir for hydropower production on the Nelson River between Lake Winnipeg and Hudson’s Bay. The second major direction for policy articulated by the MA, and relevant to the Canadian Prairies is the increased use of economic instruments to support EGS. As captured in the story by Laura Rance (Box 5), by sheer exhaustion of conventional options, receptivity to an expanded notion of Prairie agriculture that includes energy production and environmental stewardship is growing. Federal commitment for such a transformation is tentative. The nascent establishment of a Canadian organic agriculture standard is appropriate but overdue,


given the rate of growth in this sector, the higher farm incomes supported by organic production, the soil and water conservation and carbon sequestration benefits—and its lower energy costs. In the context of climate change policy, aggressive support for organic agriculture could be interpreted as simultaneous climate change mitigation and adaptation approach. A combination of carbon sequestration benefits and market price premiums paid to organic producers captures the Millennium Assessment’s principle of payment for ecological goods and services. The Canadian Wheat Board’s recent policy allowing organic wheat and barley producers more marketing flexibility, as well as CWB’s co-sponsorship of an organic conference in Brandon, Manitoba,47 may foreshadow broader federal policy support for organic production. Impediments to increased AAFC support for organic agriculture may also stem from analytical and research gaps. Expanding the WEBs project to valuate micro-watershed scale BMPs could usefully be expanded to compare environmental responses to BMPs in conventional and organic systems. In summary, constructive directions for federal ag-water policies on the Canadian Prairies that demonstrate consistency with federal climate policy and the findings and recommendations from the Millennium Ecosystem Assessment include the following:

• Co-funding for provincial watershed management programs, for example through tighter integration with joint federal-provincial environmental farm planning programs. Equivalent Agri-Environmental Plans (EAEPs) have been proposed as a mechanism for aggregating individual EFPs to a regional scale,48 however little integration with provincial watershed planning activities has taken place. Assistance developing inter-provincial watershed management plans is a logical entry point for increased federal presence.

• In the absence of well-developed markets for ecological goods and services, aggressive support for agricultural carbon sequestration programs (with a possible focus on organic producers as international research indicates relatively higher soil carbon sequestration on organic soils).

• Federal funding, and co-funding of existing EGS instruments like Manitoba’s Riparian Tax Credit.

• Federal tax credits for bioenergy production on agricultural land, and procurement policies to support bioenergy consumption.

• Federal support for farmers in transition to organic certification. The largest impediment to farmer adoption of organic production is the bridge financing requirements to make the transition.

47 http://www.organicmatters.ca/ 48 http://www.agr.gc.ca/progser/ps_efppef_e.phtml


Box 5: Farmers struggle to see some light at end of the tunnel Discouragement in community is palpable Laura Rance, Winnipeg Free Press, Saturday, October 29, 2005 It was a solemn bunch of farmers who gathered in Brandon recently for a Keystone Agricultural Producers meeting…. KAP president David Rolfe can measure the level of stress in the farming community right now by the number of phone calls he is getting. "It usually starts with someone pointing a finger at a policy or one particular thing, whether it's the high fuel prices or the education tax," he said. They are angry with KAP for not doing enough. They are angry with governments. They are angry with consumers for wanting cheap food. But eventually, it comes down to one common theme. In the face of poor crops, low market prices, soaring fuel prices, and taxes due at the end of the month, an unknown number of farmers in this province can no longer make ends meet. "They say I've expanded, I've diversified, I've done everything I possibly can—and I still can't make it," he said. Farmers once believed that markets would rebound—maybe next year. Even if they didn't, technology would improve their production to compensate. There have been failed efforts over the years to organize farmers to limit production in an effort to force prices higher. And there are ongoing efforts to disorganize them by getting rid of orderly marketing systems that prevent them from going broke sooner. Farmers have traditionally believed that governments would help—especially if producers rallied before the television cameras. And they thought that if only we could get improved trade rules—that would make all the difference. Not so anymore. "All through my youth we had our bad years and the good years but there was always a light at the end of the tunnel—things will get better. I don't see that light anymore," said John Castle, a Miniota farmer who has been going to farm meetings since before some of his fellow KAP delegates were born….There's no arguing that the production problems faced this year were unusually severe. But likewise, there's little argument that farming has been in a perpetual state of crisis for decades because of one reason or another. Apparently, the type of farming we do here has a weak immune system; it catches a cold every time the environment changes. Lenders, who a few short years ago were a source of reassurance for their farm clients, are becoming less flexible, Rolfe said. "They've run out of patience; we've run out of time." For Castle, who had clearly spent some time pondering this problem, it comes down to one fundamental shift. This part of the world was settled because governments of the day valued what the region could produce. People in other parts of Canada and in other parts of the world wanted that production badly enough that governments were willing to shoulder part of the export transportation costs. But the world has changed. "I don't know of any products that we can raise in Western Canada that they can't raise just as well somewhere else in the world," he said. "We've got to be producing what is wanted by the world because it doesn't want our current production," he said. Some have suggested farmers have more value to society as park wardens or environmental stewards than food producers. Castle said he at first thought such an idea was ridiculous. But now he openly entertains such suggestions. He's not the only one starting to think about farming in a different way. Starbuck farmer Ed Rempel wondered whether farmers should stop thinking of themselves as food producers and start using their production capacity for things the world wants and needs. He sees high oil prices and the Kyoto accord as potential allies. "If I can grow nothing but energy on my farm, I will be very happy indeed. If we reforest Western Canada, you won't see me crying, you'll see me learning about lumber." We are in the midst of a very painful and difficult transition that offers potential, yet no promise of better times ahead. The discouragement within the farming community is palpable. People aren't kidding when they worry about a "silent exodus" from their rural communities. But it's not over yet. (emphasis added)


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