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Abstract
Interest has been growing in the nature of synergies in agroecosystems, prompted in part
by growing concerns about the effects of environmental degradation on agricultural
productivity and interrelations between agricultural outputs and ecosystem outputs. Most
productivity analyses focus on technology, technical inefficiency and scale effects on
productivity; yet scope economies derived from synergies can also have substantial
effects that are likely to increase in the future. Scope economies take on special
importance when farms diversify to halt declining biodiversity and other forms of
environmental degradation. We present results of an empirical case study based on panel
data on farms in England and Wales. A stochastic input distance function is estimated
using Bayesian methods that enable economies of scope to be calculated between pairs of
outputs based on the derivatives of the input distance function. Results confirm the
presence of scope economies from diversity, providing prima facie evidence that
diversity is beneficial in farming systems in England and Wales. But a number of
challenges lie ahead to improve the data set and method of measuring scope economies
for further substantiation of this evidence. Chief among them is the need to obtain a better
measure of ecosystem outputs. The complexity of agroecosystems, with their diverse
elements and numerous interactions between elements, presents a major challenge for
data collection.