Technology and Economics (1991)

Vernon W. Ruttan

In these remarks I will discuss some of the challenges facing the global agricultural research systems as we move into the first decades of the next century. Before doing so, however, I would like to first place my remarks within the intellectual climate that has conditioned our thinking about the relationships among environmental, technological, and institutional change during the second half of the twentieth century. I will then turn to some of the sources of stress from scientific, populist, and ideological sources that have buffeted the agricultural research community over the last several decades. Finally, I will report on some of the findings for research that have emerged from several recent "consultations" that I have organized around the issues of (a) biological and technical constraints on crop and animal productivity; and (b) resource and environmental constraints on sustainable growth in agricultural production.

The research that is conducted in our universities, research institutes, and our agricultural experiment stations is valued primarily for its contributions to technical and institutional change. The demand for advances in knowledge in the social sciences and humanities, and in related professional fields, is derived primarily from the demand for institutional change and more effective institutional performance.

There are several ways of characterizing the significance of technical change. It permits the substitution of knowledge for resources; it permits the substitution of more abundant for less abundant resources; and it releases the constraints on growth imposed by inelastic resources

supplies. But technical change is itself the product of institutional innovation. Whitehead insisted that the greatest invention of the nineteenth century was the institutionalization of the process of invention—the invention of the research university, the industrial research laboratory, and the agricultural experiment station. One effect of the lag in institutional innovations needed to achieve an incentive-compatible institutional infrastructure institutions capable of achieving compatibility between individual, organizational, and social objectives—is that the by-products of technical change, what the resource economists refer to as residuals, are now filling the landscape with garbage and the earth, water, and atmosphere with chemicals.

I am prepared to insist that the contributions of advances in natural and social science knowledge to technical and institutional change have enabled modern society to achieve a more productive and better balanced relationship to the natural world than was achieved in the ancient civilizations or in earlier stages of Western industrial civilization. But the relationship between advances in knowledge, resource use, and human well-being continues to be uneasy. We are, for example, in the midst of the third wave of social concern about the relationships between natural resources and the sustainability of improvements in human well-being since World War II—and the fifth since Malthus.

The first postwar wave of concern, in the late 1940s and early 1950s, focused primarily on the quantitative relations between resource availability and growth—the adequacy of land, water, energy, and other natural resources to sustain growth. The reports of the President's Water Resources Policy Commission and the President's Materials Policy Commission were the landmarks of the early postwar resource assessment studies generated by this wave of concern. The response to this first wave of concern was technical change. A stretch of high prices has not yet failed to induce the new knowledge and new technologies needed to locate new deposits, promote substitution, and enhance productivity. If the Materials Policy Commission report were writing today, it would have to conclude that there has been abundant evidence ''of the nonevident becoming evident; the expensive, cheap; and the inaccessible, accessible."

The second wave of concern occurred in late 1960s and early 1970s. In this second wave, the earlier concern with the potential "limits to growth" imposed by natural resource scarcity was supplemented by concern about the capacity of the environment to assimilate the multiple forms of pollution generated by growth. An intense conflict was emerging between the two major sources of demand for environmental services. One was the rising demand for environmental assimilation of residuals derived from growth in commodity production and con-

sumption—asbestos in our insulation, pesticides in our food, smog in the air, and radioactive wastes in the biosphere. The second was the rapid growth in consumer demand for environmental amenities—for direct consumption of environmental services—arising out of rapid growth in per capita income and high income elasticity of demand for such environmental services as access to natural environments and freedom from pollution and congestion. One response to these concerns, still incomplete, was the design of local incentive-compatible institutions designed to force individual firms and other organizations to bear the costs arising from the externalities generated by commodity production.

Since the mid-1980s these two earlier concerns have been supplemented by a third. These more recent concerns center around the implications for environmental quality, food production, and human health of a series of environmental changes that are occurring on a transnational scale—issues such as global warming, ozone depletion, acid rain, and others. The institutional innovations needed to respond to these concerns will be more difficult to design. They will, like the sources of change, need to be transnational. Experience with attempts to design incentive-compatible transnational regimes, such as the Law of the Sea Convention, or even the somewhat more successful Montreal Protocol on reduction of CFC emissions, suggests that the difficulty of resolving free-rider and distributional equity issues imposes a severe constraint on how rapidly effective transnational regimes to resolve these new environmental concerns can be put in place.

During the last century, American agriculture has made the transition from a natural resource-based industry to a science-based industry. During this period, rapid productivity growth enabled the agricultural sector to strengthen its position in world markets while simultaneously releasing much of its labor force to the nonfarm sectors of the economy. This is in sharp contrast to recent experience in the U.S. manufacturing sector. During the last decade and a half, lagging productivity growth in traditional and high-technology manufacturing has resulted in a loss of both jobs and competitive position in world markets.

The agricultural research community has taken considerable pride in its contribution to the remarkable economic performance of the agricultural sector over the last century (see Table 1). But this pride has been severely shaken. During the 1970s and early 1980s the closely articulated U.S. Department of Agriculture (USDA)-land-grant university research system was subject to considerable criticism from

populist, scientific, ideological perspectives. At the risk of some oversimplification, it may be useful to characterize these criticisms along the following lines.

The criticism directed toward agricultural research by the general science community was that agricultural research was not "good science." A central element in this negative perception of agricultural research was that it has been funded primarily through institutional support rather than through competitive grants. A second element is that a relatively high share of agricultural research has been directed toward technology development. While generally conceding that the investment in agricultural research has paid high social dividends in the past, there was concern that the system was losing its capacity to make comparable contributions in the future.

An ideological criticism that emerged with particular force in the Office of Science and Technology Policy in the early 1980s, was a perception that public research support should be confined to the basic sciences and that the private sector should be primarily respon-

sible for applied research. The proponents of this view tend to avoid questions of the articulation or synergy between basic and applied research. There was also an even greater reluctance to address the problem of how to ensure research performance in those areas of technology development where private incentives are inadequate to generate an economically or socially optimum level of research.

The populist critics have viewed agricultural research, and the technology that has been generated by agricultural research, as responsible for the displacement of small farms and farm workers, as a source of the decline of rural communities, as a cause of deterioration in the quality and safety of food, and as an assault on the quality of the environment. Thus, in the populist view, agricultural research was regarded as a powerful instrument of technical and social change that has been captured by organized agribusiness and has misdirected its energies against the people and the institutions that it was designed to serve. During the early and mid-1980s, a global recession and the rising value of the dollar combined to dampen the demand for U.S. agricultural commodities abroad. High interest rates, associated first with inflation and later with massive federal borrowing, imposed severe financial burdens on farmers and their suppliers. These combined to force a decline in farm commodity prices, severe deflation in land values, and a financial crisis for many farmers. Some critics suggested a moratorium on agricultural research and technology development. Others called for the transfer of resources from research directed to productivity enhancement to cost reduction—apparently without realizing that these were opposite sides of the same coin. State agricultural experiment stations were urged to withdraw from efforts supported by the U.S. Agency for International Development to strengthen national research systems in developing countries.

By the end of the 1980s new pressures were being brought to bear on the U.S. agricultural research system. Concerns about the impact of agricultural intensification widened. In the 1970s these concerns had initially focused on the effects of pesticides and nonpoint sources of pollution on natural environments and on the safety of farm workers and consumers. During the 1980s concerns about the effects of more intensive agricultural production on (a) resource degradation through erosion, salinization, and depletion of groundwater; and (b) the quality of surface and groundwater through runoff and leaching of plant nutrients and pesticides intensified. Terms that had been introduced by the populist critics of agricultural research—such as alternative, low-input, regenerative, and sustainable agriculture—began to enter the vocabulary of those responsible for allocating resources for agricultural research. After an initial period of resistance, some leaders of the

agricultural research community moved to embrace this new set of concerns. The recently issued report by the National Research Council Board on Agriculture on Alternative Agriculture has been viewed as a landmark in this conversion. In my judgment, this report is more appropriately viewed as a political document designed to capture the initiative from the populist critics of institutionalized agricultural research.

The changes that I have described can be put in a somewhat broader context. During the last two decades, the agricultural research system has been attempting to respond to a new set of demands—and opportunities—resulting from populist, scientific, and ideological challenges in an environment in which its access to economic and political resources has been declining. Federal agricultural research funding and performance have stagnated since the late 1960s (Figures 1 and 2). By the late 1980s the USDA provided only about 16 percent of total federal support for academic basic research in plant biology. An increasing share of the USDA Agricultural Research Service research was supported by transfers from other agencies. Modest growth of

FIGURE 1. Sources of funding for government R&D. SOURCE: Pray (1989).

FIGURE 2. Performance of government R&D. SOURCE: Pray (1989).

state support for agricultural research has been sufficient to slightly more than offset the decline in federal support. Private sector agricultural research has risen from a level roughly equivalent to the level of the USDA-land-grant system in the mid-1960s to close to 60 percent of the total in the mid-1980s. However, there is some evidence of a decline in private sector research, both in the newer areas of biotechnology and in the more traditional areas of biological technology such as plant breeding, since the mid-1980s.

In an attempt to reverse the stagnation in public support for agricultural research, the National Research Council Board on Agriculture issued a report in the fall of 1989 calling for an increase in funding of $500 million for the competitive research grants program administered by the USDA. The program would support research in public and private universities, the USDA research agencies, and other research agencies of the state and federal government. Despite the boldness of the proposal, it would not be surprising to see an increase in funding of the magnitude achieved over a five-year period—by

which time the purchasing power of the increase may have been reduced by 25 percent as a result of inflation. If an expanded competitive grants program, even of the size proposed, is to make more than a marginal impact on agricultural research capacity, the support for other public sector agricultural research will have to increase from a level of approximately $2.0 billion in 1986 to the $2.5 to $3.0 billion range (in current dollars) by the mid-1990s.

Funding increases in the range discussed above will not resolve the major problems facing the agricultural research system. One of the most critical is the issue of who will do the research. In framing the proposal for the $500 million increase in competitive grant funding, the Board on Agriculture was unable to avoid a conclusion that had become obvious a decade ago—most of the new research would be conducted by a subset of elite institutions. In testimony presented at joint hearings by the Senate and House Agriculture Subcommittees, William Marshall, who heads the Microbial Genetics Division of Pioneer Hybrid International, insisted that the viability of agricultural research will require ''broadening of the scientific base in agricultural research to include the fundamental sciences outside of the land-grant colleges of agriculture." Furthermore, "no more than 15 of our 57 experiment stations have the capability to do significant amounts of research in biotechnology."

It seems clear that by the end of the first decade of the next century, the agricultural research landscape will look much different than it does today. Moreover, pressures for the revision of research priorities arising from scientific, societal, and environmental change will not abate.

During the last six months, I have had an opportunity, with support from the Rockefeller Foundation, to organize a series of small "consultations" on the agricultural research priorities that might be expected to emerge as we move into the early decades of the next century. The first of these consultations was organized around the topic "Biological and Technical Constraints on Crop and Animal Productivity," and the second around the issues of "Resource and Environmental Constraints on Sustainable Growth in Agricultural Production." Although the consultations were not confined to domestic priorities, the issues and conclusions were quite relevant to U.S. agricultural research policy.

Those familiar with the evidence on long-term declines in agricultural commodity prices (Figures 3 and 4) or with media attention to

the "new biotechnology" may find it difficult to comprehend why anyone should be concerned about the possibilities of a lag in either agricultural production or productivity over the next several decades. Let me justify my concern with just four observations: (1) the yields obtained on maximum yield trials at the International Rice Research Institute are no higher today than they were in the mid-1960s; (2) maize yields in the United States continue to increase at about one bushel per year—but this is a much smaller rate of increase than 30 years ago; (3) the projected impact of biotechnology on agricultural production continues to be postponed—benefits expected in this decade are now expected in the next; and (4) national agricultural research capacity has weakened in a number of debt-plagued developing countries and in Eastern Europe and the USSR.

Let me now turn to some major conclusions from the consultation on biological and technical constraints.

Advances in conventional technology will remain the primary source of growth in crop and animal production over the next quarter century. Almost all future increases in agricultural production must come from further intensification of production on land that is now devoted to crop and livestock production. Until well into the second decade of the next century, the necessary gains in crop and animal productivity will continue to be generated by improvements resulting from conventional plant and animal breeding and from more intensive and efficient use of technical inputs, including chemical fertilizers, pest-control chemicals, and higher quality animal feeds. The productivity gains from conventional sources are likely to come in smaller increments than in the past. If they are to be realized, higher plant populations per unit area, new tillage practices, improved pest and disease control, more precise application of plant nutrients, and advances in soil and water management will be required. Gains from these sources will be crop, animal, and location specific. They will require closer articulation between the suppliers and users of knowledge and new technology. These sources of productivity gains will be extremely knowledge and information intensive. If they are to be realized, research and technology transfer efforts in information and management technology must become increasingly important sources of growth in crop and animal productivity. In the short run, that is, the next several decades, no other sources of growth in production will be adequate to meet the demands that will arise from growth in population and income, and be placed on agricultural production in either the developed or developing countries. Both national and international agricultural research systems will need to increase the proportion of

research resources devoted to improvement of agronomic practice relative to plant breeding.

Advances in conventional technology will be inadequate to sustain the demands that will be placed on agriculture in the second decade of the next century and beyond. Advances in crop yields have come about primarily by increasing the ratio of grain to straw rather than by increasing total dry matter production. Advances in animal feed efficiency have come by decreasing the proportion of consumed feed that is devoted to animal maintenance and increasing the proportion that produces usable animal products. There are severe physiological constraints to continued improvement along these conventional paths. These constraints are most severe in those areas that have already achieved the highest levels of productivity—as in Western Europe, North America, and parts of East Asia.

The impact of these constraints can be measured in terms of declining incremental response to energy inputs—in the form of reductions in both the incremental yield increases from higher levels of fertilizer application, and the incremental savings in labor inputs from the use of larger and more powerful mechanical equipment. One consequence is that in countries that have achieved the highest levels of output per hectare or per animal unit, an increasing share of both public and private sector research budgets is being devoted to maintenance research—the research needed to sustain existing productivity levels. A decline in the incremental returns to agricultural research would impose a higher priority on efficiency in the organization of research and on the allocation of research resources.

A reorientation of agricultural research will be necessary to realize the opportunities for technical change being opened up by advances in microbiology and biochemistry. Advances in basic science, particularly in molecular biology and biochemistry, continue to open up new possibilities for supplementing traditional sources of plant and animal productivity growth. Possibilities range from the transfer of growth hormones into fish to the conversion of lignocellulose into edible plant and animal products.

The realization of these possibilities will require a reorganization in the performance of agricultural research. An increasing share of the new knowledge generated by research will reach producers in the form of proprietary products or services. This means that the incentives exist to draw substantially more private sector resources into agricultural research. Public sector research organization increasingly will have to move from a "little science" to a "big science" mode of organization. Examples include the Rockefeller Foundation-sponsored

collaborative research program on the biotechnology of rice and the University of Minnesota program on the biotechnology of maize. In the absence of more focused research efforts, it seems likely that the promised gains in agricultural productivity from biotechnology will continue to recede in the future.

Efforts to institutionalize agricultural research capacity in developing countries must be intensified. Crop and animal productivity levels in most developing countries remain well below the levels that are potentially feasible. Access to the conventional sources of productivity growth— from advances in plant breeding, agronomy, and soil and water management will require the institutionalization of substantial agricultural research capacity. In a large number of developing countries this capacity is just beginning to be put in place. A number of countries that experienced substantial growth in capacity during the 1960s and 1970s have experienced an erosion of capacity in the 1980s. Even a relatively small country, producing a limited range of commodities under a limited range of agro-climatic conditions, will require a cadre of 250-300 agricultural scientists. Countries that do not acquire adequate agricultural research capacity will not be able to meet the demands placed on their farmers as a result of growth in population and income. Research systems that do not generate resource and productivity enhancing capacity will fail to sustain public support.

There are substantial possibilities for developing sustainable agricultural production systems in a number of fragile resource areas. Research in the tropical rain forest areas of Latin America and in the semiarid tropics of Africa suggests the possibility of developing sustainable agricultural systems with substantially enhanced productivity. It is unlikely, and perhaps undesirable, that these areas become important components of the global food supply system. But enhanced productivity is important to the people who live in these areas now and in the future. It is important that the research investment in soil and water management and in farming systems be intensified in these areas.

Over the long run, energy and mineral nutrition can be expected to emerge as increasingly serious constraints on agricultural production. During the last century, technical change has been directed along alternative paths in different countries by their relative resource endowments. Countries where land was relatively scarce or expensive, such as Japan, placed an emphasis on biological technology—in effect, inventing around the land resource constraint. Countries where labor was relatively scarce or expensive, such as the United States, placed greater emphasis on advancing mechanical technology—in effect inventing around the labor constraint. Over the next half century, energy derived from liquid fuels is likely to become a serious constraint. It is also possible

that the reserves of phosphate raw material will decline to levels that will result in much higher relative prices for phosphate fertilizer. It is likely that it will be necessary to allocate substantial research resources to invent around these two constraints.

The rationalization of regulatory regimes will become an increasingly important factor in determining the profitability of research investments and international competitiveness in agricultural production. Incentives for private sector agricultural research appear to be quite sensitive to uncertainty about changes in regulatory regimes and the administration of regulations. Incentives for research and the potential gains from research investment are reduced when use of technology is restricted for reasons other than the assurance of health and safety. Consumers may press for regulation based on aesthetic concerns. Producers may press for regulation to protect themselves from domestic or international competition. Pressure to achieve greater consistency among national regulatory regimes is likely to become an increasingly important factor in international trade negotiations. It will be necessary to devote substantial research efforts to identifying and quantifying the scientific, technical, economic, and psychological information needed to rationalize regulatory regimes in the future.

A major effort to assemble and characterize available plant and animal genetic resources is essential to make the transition from the conventional biological technology of the twentieth century to a biotechnology-based agriculture for the twenty-first century. A major constraint in the development of a cost-effective strategy for collection and preservation of genetic resources is an adequate characterization of the materials in ex situ locations and in ex situ collections. A genome mapping program for crop plants is essential if we are going to make effective use of the genetic engineering techniques that are available now and that will become available in the future.

Research on alternative crops and animals that can be introduced into production systems can become a useful source of growth in some areas. On a local or regional basis, the development and incorporation of minor cultivars and species could make important nutritional and economic contributions. It is unlikely that alternative crops or animals will emerge to substantially replace existing crop cultivars or animal species in production systems. It would be wishful thinking to expect any new developments as significant as the expansion of soybean production during the past half century.

There is a need to establish substantial basic biological research and training capacity in the tropical developing countries. A number of basic biological research agendas that are important for applied research and technology development in health and agriculture in the tropics

receive, and are likely to continue to receive, inadequate attention in the temperate region developed countries. There is also a need for closer articulation between training in applied science and technology and training in basic biology. When such institutes are established, they should be more closely linked with existing universities than the series of agricultural research institutes established by the Consultative Group on International Agricultural Research.

As we look even further into the next century, there is a growing concern, as noted earlier, about the impact of a series of resource and environmental constraints that may seriously impinge on our capacity to sustain growth in agricultural production. One set of concerns centers on the environmental effects of agricultural intensification. These include groundwater contamination from plant nutrients and pesticides, soil erosion and salinization, the growing resistance of insect pests and pathogens and weeds to present methods of control, and the contribution of agricultural production and land use changes to global climate change. The second set of concerns stems from the effects of industrial intensification of global climate change. It will be useful, before presenting some of the findings of the second consultation, to characterize our state of knowledge about global climate change.

There can no longer be any question that the accumulation of carbon dioxide (CO₂) and other greenhouse gases—principally methane (CH₄), nitrous oxide (N₂O), and chlorofluorocarbons (CFCs)—has set in motion a process that will result in some rise in global average surface temperatures over the next 30-60 years. There is substantial disagreement about whether warming due to greenhouse gases has already been detected. And there continues to be great uncertainty about the increases in temperature that can be expected to occur at any particular date or location in the future.

Most carbon dioxide emissions come from fossil fuel consumption. Carbon dioxide accounts for roughly half of radiative forcing (Figure 5). Biomass burning, cultivated soils, natural soils, and fertilizers account for close to half of nitrous oxide emissions. Most of the known sources of methane are a product of agricultural activities— principally enteric fermentation in ruminant animals, release of methane from rice production and other cultivated wetlands, and biomass burning. Estimates of nitrous oxide and methane sources have a very fragile empirical base. Nevertheless, it appears that agriculture and related land use could account for somewhere in the neighborhood of 25

FIGURE 5. Contributions to increases in radiative forcing in the 1990s.

SOURCE: Reilly and Bucklin (1989).

percent of radiative forcing. On a regional basis the United States contributes about 20 percent of radiative forcing by all greenhouse gases while Western and Eastern Europe and the USSR contribute about 30 percent. In the near future, contributions to radiative forcing from the Third World will exceed those from the Organization for Economic Cooperation and Development and what used to be called the centrally planned economies.

Several participants in the second consultation characterized the alternative policy approaches to the threat of global warming as preventionist and adaptionist. It seems clear that a preventionist approach could involve about five policy options. They include reduction in fossil fuel use, or capture of CO₂ emissions at the point of fossil fuel combustion, reduction in the intensity of agricultural production, reduction of biomass burning, expansion of biomass production, and energy conservation.

The simple enumeration of these policy options should be enough to introduce considerable caution about assuming that radiative forcing will be limited to present levels. Let me be more specific. Fossil fuel use will be driven, on the demand side, largely by the rate of economic growth in the Third World and by improvements in energy efficiency in the developed and the centrally planned economies. On the supply side, it will be constrained by the rate at which alternative energy sources will be substituted for fossil fuels. Of these only energy efficiency and conservation are likely to make any significant contribution over the next generation. The speed with which it will occur will be limited by the pace of capital replacement. Any hope of significant reversal of agricultural intensification, reduction in bio-

mass burning, or increase in biomass absorption is unlikely to be realized within the next generation. The institutional infrastructure or institutional resources that would be required do not exist and will not be put in place rapidly enough to make a significant difference.

The possibilities for energy conservation make it fairly easy to be cautiously optimistic about endorsing a preventionist approach in dealing with the industrial sources of climate forcing—at least in the currently industrialized countries. I see little alternative, however, to an adaptionist approach in attempting to assess how agricultural research portfolios should respond to the implications of global climate change. It also forces me to agree that we will not be able to rely on a technological fix to the global warming problem. The fixes, whether driven by preventionist or adaptionist strategies, must be both technological and institutional. An adaptionist strategy for agriculture implies moving as rapidly as possible to design and put in place the institutions needed to remove the constraints that intensification of agricultural production is currently imposing on sustainable increases in agricultural production. I am referring, for example, to the policies and institutions needed to rationalize water use in the western United States or to deal with groundwater management (including contamination) in both developed and developing countries. If we are successful in putting in place such policies and institutions, we will then be in a better position to respond to the more uncertain changes that will emerge as a result of future global climate change.

Let me now turn to some of the research implications that emerged from the consultation.

A major research program on incentive compatible institutional design should be initiated. The first research priority is to initiate a large-scale program of research on the design of institutions capable of implementing incentive-compatible resource management policies and programs. By incentive-compatible institutions ! mean institutions capable of achieving compatibility among individual, organizational, and social objectives. A major source of the global warming and environmental pollution problem is the direct result of the operation of institutions that induce behavior by individuals, and public agencies that are not compatible with societal development—some might say survival—goals. In the absence of more efficient incentive-compatible institutional design, the transaction costs involved in ad hoc approaches are likely to be enormous. Substantial basic research will be required to support a successful program of applied research and institutional design.

A serious effort to develop alternative land use, farming systems, and

food systems scenarios for the twenty-first century should be initiated. A clearer picture of the demands that are likely to be placed on agriculture over the next century and of the ways in which agricultural systems might be able to meet such demands has yet to be produced. World population could rise from the present 5 billion level to the 10-20 billion range. The demands that will be placed on agriculture will also depend on the rate of growth of income—particularly in the poor countries where consumers spend a relatively large share of income growth on subsistence—food, clothing, and housing. The resources and technology that will be used to increase agricultural production by a multiple of 3-6 will depend on both the constraints on resource availability that are likely to emerge and the rate of advance in knowledge. Advances in knowledge can permit the substitution of more abundance for increasingly scarce resources and reduce the resource constraints on commodity production. Past studies of potential climate change effects on agriculture have given insufficient attention to adaptive change in nonclimate parameters. But application of advances in biological and chemical technology, which substitute knowledge for land, and advances in mechanical and engineering technology, which substitute knowledge for labor, have in the past been driven by increasingly favorable access to energy resources— by declining prices of energy. It is not unreasonable to anticipate that there will be strong incentives, by the early decades of the next century, to improve energy efficiency in production and use of agricultural products. Particular attention should be given to alternative and competing uses of land. Land use transformation, from forest to agriculture, contributes to radiative forcing through release of CO₂ and methane into the atmosphere. Conversion of low-intensity agricultural systems to forest has been proposed as a method of absorbing CO₂. There will also be increasing demands on land use for watershed protection and biomass energy production.

The capacity to monitor the agricultural sources and impacts of environmental change should be strengthened. It is a matter of serious concern that only in the last decade and a half has it been possible to estimate the magnitude of soil loss in the United States and its effects on agricultural productivity. Even rudimentary data on soil loss are almost completely unavailable in most developing countries. The same point holds, with even greater force, for groundwater pollution, salinization, species loss, and other areas. It is time to design the elements of a comprehensive agriculturally related resource-monitoring system and to establish priorities for implementation. Data on the effects of environmental change on the health of individuals and

communities is even less adequate. The monitoring effort should include a major focus on the effects of environmental change on human populations.

Lack of firm knowledge about the contribution of agricultural practices to the methane and nitrous oxide sources of greenhouse forcing was mentioned at numerous times during the consultation. Much closer collaboration between production-oriented agricultural scientists, ecological trained biological scientists, and the physical scientists that have been traditionally concerned with global climate change is essential. This effort should be explicitly linked with the monitoring efforts currently being pursued under the auspices of the International Geosphere-Biosphere Programs.

The design of technologies and institutions to achieve more efficient management of surface and groundwater resources will become increasingly important. During the twenty-first century water resources will become an increasingly serious constraint on agricultural production, which is already a major source of decline in the quality of both ground and surface water. Limited access to a clean and uncontaminated water supply is a major contributor to disease and poor health in many parts of the developing world and in the centrally planned economies. Global climate change can be expected to have a major differential impact on the water availability, water demand, erosion, salinization, and flooding. The development and introduction of technologies and management systems that enhance water use efficiency represent a high priority both because of short-and intermediate-run constraints on water availability and the longer-run possibility of seasonal and geographical shifts in water availability. The identification, breeding, and introduction of water-efficient crops for dryland and saline environments is potentially an important aspect of achieving greater water-use efficiency.

The modeling of the sources and impacts of climate change must become more sophisticated. One of the problems with both the physical and economic modeling efforts is that they have tended to be excessively resistant to advances in micro-level knowledge, including failure to take into consideration climate change response possibilities from agricultural research and the response behavior of decision-making units such as governments, agricultural producers, and consumers.

Research on environmentally compatible farming systems should be intensified. In agriculture, as in the energy field, there are a number of technical and institutional innovations that could have both economic and environmental benefits. Among the technical possibilities is the design of new ''third'' or "fourth" generation chemical, biorational, and biological pest management technologies. Another is the design of land use

technologies and institutes that will contribute to reduction of erosion, salinization, and groundwater pollution.

Immediate efforts should be made to reform agricultural commodity and income support policies. In both developed and developing countries, producers' decisions on land management, farming systems, and use of technical inputs (such as fertilizers and pesticides) are influenced by government interventions such as price supports and subsidies, programs to promote or limit production, and tax incentives and penalties. It is increasingly important that such interventions be designed to take into account the environmental consequences of decisions by land owners and producers induced by the interventions.

Alternative Food Systems. A food-system perspective should become an organizing principle for improvements in the performance of existing systems and for the design of new systems. The agricultural science community should be prepared, by the second quarter of the next century, to contribute to the design of alternative food systems. Many of these alternatives will include the use of plants other than the grain crops that now account for a major share of world feed and food production. Some of these alternatives will involve radical changes in food sources. One such system is based on lignocellulose—both for animal production and human consumption.

In this concluding section I return to the problem of whether the public agricultural research system will respond to the new challenges and opportunities of (a) releasing the biological and technical constraints on crop and animal productivity; (b) reducing the contribution of the agricultural sector to environmental degradation; and (c) enabling the agricultural sector to adapt to those environmental changes that emerge in response to the intensification of industrial production. Issues of both scientific and political capacity are involved.

Two decades of erosion in research capacity, particularly at the federal level, have left the research system in a weakened position to respond to either—let alone both—sets of concerns. The significance of this decline is reinforced by the even more rapid decline in research support and capacity in the other federal resource agencies and in the very limited support and capacity for mission-oriented research in the academic biological and environmental sciences.

The capacity of the agricultural research system to respond is also weakened by the political constraints within which it functions. The traditional agricultural research clientele—the organized commodity groups, elements of the agribusiness community, and the members of

the Congress and the state legislatures who have significant agricultural constituencies—are capable of bring considerable pressure to bear to limit the transfer of resources necessary to respond to the environmental research agenda. They doubt, correctly in my view, the capacity of the private sector to replace the traditional production-oriented research conducted by the public sector. Yet, they have not demonstrated in recent years the political resources necessary to secure expanded funding, or even the funding necessary to prevent erosion of capacity needed to respond to the challenge of meeting the constraints on agricultural production.

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VERNON D. RUTTAN is Regents' Professor in the Department of Agricultural and Applied Economics and the Department of Economics at the University of Minnesota, Minneapolis. Dr. Ruttan studied at Yale University where he received a B.A. degree and at the University of Chicago, where he received the M.A. and Ph.D. degrees. He spent the early portion of his career as an economist with the Tennessee Valley Authority and also as an assistant professor in the Department of Agricultural Economics at Purdue University. He has authored numerous articles in the field of agricultural economics and is a member of the National Academy of Sciences.