Modelling synergies and scope economies between farm enterprises and ecosystem outputs in the agricultural sector in England and Wales

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 that confirms the presence of scope economies from diversity.