Agriculture, Profitability and Climate Change: Can Accounting Help Identify Best Farming Practices? Empirical Case Study in Spain

Abstract

We perform an empirical analysis on the benefits of, and the challenges faced by, sustainability accounting in measuring the effects of climate change for a sample of Spanish rice farms. We use farm yields, revenues and incomes as indicators of economic performance, and greenhouse gas emissions, and direct and indirect energy consumption as indicators of climate change effects. According to our data, farms with higher yields, revenues and income are responsible for a greater environmental impact, measured in total gigajoules of energy consumed and tons of carbon dioxide emitted, than farms with a lower economic performance. Results show that in our sample the achievement of higher yields is attributable to the greater use of chemical inputs and fossil fuels and not to innovative and sustainable farming practices. The results indicate that accounting for climate change effects is not only possible but also necessary to provide more accurate information on the overall costs and benefits of farming. Greater transparency in accounting information should serve to highlight which farming activities are better able to reduce climate change impacts.

Decision-making and resilience in agriculture: improving awareness of the role of accounting

“…It is known that accounting can support organisational climate change adaptation by performing the following functions: a risk assessment function, a valuation function and a disclosure function (Linnenluecke et al , 2015). Hence, concentration on financially informed tools could provide better information on farmers’ natural and economic risks and opportunities (Bremer and Linnenluecke, 2017; Antonini and Argilés Bosch, 2017). But accounting systems can also provide an opportunity for improved business knowledge and skills, improved farm valuation awareness and communication with key stakeholders, especially when integrated with smart technologies (Mancini et al , 2021).…”

“…Such decision-making tools include improved accounting and finance methods and information that can support awareness and increase profitability (Mancini et al , 2021), but can also mean a better understanding of natural resource use and improved environmental outcomes (Ogilvy et al , 2018; Tingey-Holyoak et al , 2019, 2020, 2021a). Recent research has shown that improved access to relevant accounting information can also build adaptive capacity to climate change impacts (Antonini and Argilés Bosch, 2017). Whilst interest is growing around farm accounting and resulting benefits in farm productivity and efficiency, there is still a need for more robust accounting innovations to further support farmer decision-making (Argilés and Slof, 2003; Jack, 2005, 2006; Jakobsen, 2017; Ndemewah et al , 2019; Gottlieb et al , 2021).…”