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Abstract

Knowledge of the true social benefits of pro-environmental activities is limited due to the difficulty of evaluating and quantifying the non-market benefits of such actions. Valuing non-marketed compost benefits and impacts is difficult because they do not have market prices, as they are not bought and sold (i.e. traded) in markets. This article fills this gap by quantifying the non-market benefits of compost use in agriculture. As an initial contribution, this study applied revealed preference methods to quantify the economic values of important non-marketed compost benefits to plant and soil systems in tree and shrub nursery production. The estimated benefits were compared for compost produced using two windrow composting methods, namely: aerobic or thermophilic composting and fermentative or static pile inoculated composting. Specific compost benefits considered included: (i) medium in potting soil mix; (ii) Nitrogen Phosphorus and Potassim (NPK) nutrient supply; (iii) improved nursery plant yield/performance; (iv) disease, pest and weed control and (v) reduced branch pruning. Total economic value, aggregated for the compost benefit types considered, was lower for thermophilic compost applied (CAD$192 per tonne per year) than for fermentative compost (CAD$385 per tonne per year), due to lower fermentative compost production cost. Among the compost benefit types considered, improved nursery plant yield and performance accounted for the highest proportion of quantified benefits; 75% of total economic value for thermophilic compost and 93% for fermentative compost. Further studies considering all important compost benefits beyond those considered in this study, and compost use in other agricultural production systems will be useful.

Keywords

Non-marketed economic values compost benefits horticulture

Highlights

Quantified monetary values of selected compost benefits to plant and soil systems

Estimated benefits compared for compost produced using two windrow methods

Economic values based on compost applied to tree and shrub nursery fields

Improved plant yield accounted for highest proportion of quantified benefits

Introduction

Climate change and environmental degradation due to human activities have led to a demand for knowledge on actions that can decrease the ecological footprint of human activities (Intergovernmental Panel on Climate Change, 2014). An obstacle to such pro-environmental actions, especially for businesses, is lack of knowledge and technical information on the true economic costs and benefits of pro-environmental actions (Van der Werff and Steg, 2018). A cost–benefit analysis of pro-environmental actions is complicated because of challenges associated with valuing the non-marketed benefits of such actions. Non-market benefits of pro-environmental actions are defined as the benefits of pro-environmental actions that do not have market prices, as they are not bought and sold (i.e. traded) in markets (Peterson, 2003). Although compost from biowastes and application in horticulture and agriculture have various beneficial effects, the monetary values to users are difficult to quantify (Termorshuizen et al., 2004) because many of the compost benefits are non-marketed benefits. This study fills this important gap in the context of compost use by commercial tree and shrub nursery growers. However, the approach can be applied to quantifying the economic values of benefits associated with similar pro-environmental activities in agriculture and economic sectors.

Compost use by commercial growers in the horticulture and agriculture industries can increase further with better knowledge and understanding of the true economic benefits, especially non-marketed benefits of compost to soil and plant systems compared with other fertilizers and soil amendments (Jalalipour et al., 2024; Martínez-Blanco et al., 2013; Paulin and O’Malley, 2008). Although studies have assessed specific agronomic and environmental compost benefits (e.g. Garg et al., 2024; Martínez-Blanco et al., 2013; Tomati et al., 2002; Termorshuizen et al., 2004), research quantifying the monetary values of compost benefits, especially non-marketed benefits, is limited (Meyer-Kohlstock et al., 2013; Renkow and Rubin, 1998), mainly because most of the benefits lack a direct basis for valuing them (Freeman et al., 2014), or are difficult to quantify and determine in monetary units (Chen et al., 2021; Termorshuizen et al., 2004).

Economic studies have evaluated compost facility construction, fixed and operating costs using specific composting technologies and methods for agricultural waste (Brodie et al., 2000; Chen et al., 2021), and municipal solid waste ( Chen, 2016; Mehta et al., 2018; Renkow and Rubin, 1998). Other studies have examined the economic implications of substituting specific soil amendment constituents with various proportions of compost (e.g. Thornsbury et al., 2000). Another group of studies has investigated composting as a value-added alternative to biowaste diversion from landfills (e.g. Kamyab et al., 2015; Lin et al., 2019; Parcell et al., 2015). Composting facility operators need to compare the true economic costs associated with investing in compost facilities and production against associated economic returns from sales or, where the product is not sold, the savings and other direct and indirect benefits of compost use. In a comprehensive review of the literature on compost use in land and soils systems, Martínez-Blanco et al. (2013) identified various agronomic and environmental benefits for horticulture and agriculture, including: (i) nutrient supply; (ii) carbon sequestration; (iii) weed, pest and disease suppression; (iv) plant yield and performance; (v) soil erosion control; (vi) soil moisture improvement; (vii) soil biological properties and biodiversity, and soil workability and (viii) crop nutritional quality. However, few studies have quantified the monetary benefits of compost use in plant and land systems primarily because most of the benefits of compost application to agriculture are ‘hard to quantify and to express in monetary units’ (Termorshuizen et al., 2004: 347). This study is an initial contribution to bridging this knowledge gap.

The lack of technical information on the economic value of compost has several implications. Compost co-benefits that are difficult to quantify in monetary terms are often overlooked by growers when evaluating management decisions, as they cannot be easily factored into cost and benefit evaluations (Mehta et al., 2018; Thornsbury et al., 2000). Thus, farmers and nursery horticulture growers are reluctant to purchase and use quality commercial grade compost because information on associated direct and, in particular, non-marketed benefits is limited, thereby making justification for the purchase difficult (Collins, 1991; Environment Canada, 2013; Paulin and O’Malley, 2008). More generally, Termorshuizen et al. (2004) noted that evaluating composting and alternative waste management methods is compromised when quantified monetary values of the direct (or marketed) and indirect (or non-marketed) compost benefits are not captured in the analysis.

The purpose of this study was to develop and apply a framework to quantify the monetary value of important compost benefits to tree and shrub nursery production, such that they can be accounted for in cost–benefit assessments by growers and researchers. The estimates emphasized compost application to plant and soil systems for tree and shrub nursery production. Data availability limited the specific compost benefits considered to the following: (i) contribution to the bulk in potting soil mix; (ii) nutrient supply; (iii) weed, pest and disease suppression; (iv) plant yield and performance and (v) reduced branch pruning. Lack of data for the tree and nursery production case study considered did not allow for quantifying monetary values of other important direct compost benefits (e.g. carbon sequestration, erosion control) and indirect benefits (e.g. soil workability, biodiversity and soil biological properties). The benefits were compared for compost produced using two windrow methods, namely: aerobic or thermophilic composting versus fermentative or static pile inoculated composting (SPIC).

Farmers and nursery growers will find the technical information on non-marketed compost benefits to plant and soil systems useful in comparison to other soil amendments and fertilizers. In addition, the benefit estimates provide previously unexplored insights on the true economic value of composting, which are not traditionally captured for example in studies comparing different waste management methods. Pricing strategies for compost produced also need to be based on a comprehensive understanding of the monetary benefits relative to compost production costs, and we provide estimates of the benefits.

Economic valuation of non-marketed benefits: A brief review

In general, determining the economic value of ecological goods and services is based on contribution of the resource to human wellbeing. Estimating the economic value of some natural resource benefits is based on valuation of changes in amount of marketed products or value of production cost savings. However, for other natural resource investments and ecological goods and services, such benefits are difficult to measure because they are not traded (i.e. bought and sold) in a market (Freeman et al., 2014). The values humans attach to such natural resource changes may be based on benefits derived or anticipated or conceived non-use welfare benefits (Shiferaw et al., 2005). In addition, benefits derived from a resource (e.g. compost application) may accrue on-site; on the tree and shrub nursery fields (such as disease, pest and weed suppression) or off-site (e.g. carbon sequestration and greenhouse gas emission reduction). This study focused on on-site compost use values to soil and plant systems in tree and shrub nursery production.

Most environmental and agronomic benefits of compost use in horticulture and agriculture are non-marketed in nature. As a result, it is difficult to observe their market prices or monetary values. In the absence of traditional measurable or quantifiable benefits, the true economic values tend to be uncounted for by users (Termorshuizen et al., 2004), or ignored by users and other decision-makers (Freeman et al., 2014). This can result in erroneous biomass waste management or biowaste disposal choices or, for compost already produced, suboptimal compost-based agricultural production and management decisions (Chen et al., 2021). For accurate comparison of composting decisions and policy alternatives, the important compost benefits and impacts need to be evaluated, and not just those that are easily quantified in monetary terms in a market.

To overcome the lack of market values, economists have applied nonmarket valuation techniques, including various stated preference and revealed preference methods, estimated using shadow prices, that is, price values that would be paid for a good or service if a market existed for the product. Important requirements for quantifying non-marketed benefit values include: (i) the important environmental and agronomic compost benefits can be identified; (ii) the benefits can be quantified and (iii) the measures can be valued in money-metric terms (Boyer and Polasky, 2004). Stated preference methods, including contingent valuation and choice modelling, commonly apply survey-based methods to elicit economic values. Although economists have developed techniques to address key limitations of stated preference methods for determining shadow prices, such shadow pricing techniques involving surveys or large market data can be costly relative to the reliability of the price estimates generated (Council of Rural Research and Development Corporations, 2018) and was beyond the scope and budget for this research study. Revealed preference methods commonly apply imputed prices from proxy or actual market or behaviour information or data, and include hedonic pricing, substitute cost, compensation payments and repair or avoidance cost methods (Council of Rural Research and Development Corporations, 2018). In this study, available market and tree and shrub nursery production and management information provided another justification for using various revealed preference methods to elicit prices of specific compost benefits.

Research methods

The non-marketed compost benefits were quantified in terms of use values (i.e. derived from direct use of the compost for tree and shrub nursery production; Council of Rural Research and Development Corporations, 2018; Freeman et al., 2014). For example, the substitute cost method was used to estimate the value of major nutrients in compost produced on-site using the retail market value of nitrogen, phosphorous and potassium (NPK) fertilizer sold in the study area (see, e.g. Council of Rural Research and Development Corporations, 2018). Similarly, avoidance cost methods were used to estimate compost benefits associated with weed suppression and control, and nursery plant disease and pest control for the tree and shrub nursery plants (Council of Rural Research and Development Corporations, 2018; Nunes et al., 2009). The methods used in this study allowed for estimating non-marketed economic values, including cost savings associated with actual or specific practices, and plant yield and performance with and without compost application. For example, compost benefits associated with tree and shrub nursery plants disease and weed suppression were quantified in terms of cost avoided or chemicals cost savings.

Compost application

Primary data used to quantify the benefits was based on compost produced on-site by a commercial tree and shrub nursery grower in British Columbia, Canada and the compost applied to tree and shrub nursery fields. The grower provides nursery plants to wholesalers and retailers in western Canada and northwestern United States. Compost applied to the tree and shrub nursery fields was produced using two windrow composting methods, namely: aerobic or thermophilic composting and fermentative or SPIC (Chen et al., 2021).

Samples of the compost produced were collected on site in 2020 and 2021 and shipped to SGS Canada Inc., Guelph, Ontario, Canada, a certified commercial testing laboratory which specializes in testing and analysing soil and organic amendments (such as compost and manure). Standard operating protocols were used in both years in the collection, handling, packaging and shipping representative compost samples produced from the two composting methods. The protocols included collecting multiple samples along the entire length of the thermophilic and fermentative windrow piles, and mixing thoroughly before a composite or representative sample was packaged and then shipped to the commercial testing laboratory. The compost samples were analysed by the testing laboratory using the Compost Package II testing services, using standard or benchmark methods for compost analysis from the Test Methods for the Examination of Composting and Compost (Thompson et al., 2002). Important compost quality characteristics used in the non-marketed compost benefits study, along with the biomass ingredients and other inputs and processing characteristics for the two windrow composting systems are summarized in Table 1.

Table 1.

Selected compost characteristics and field application to tree and shrub nursery fields.

Composting method	Aerobic/thermophilic	Fermentative
(a) Feedstock proportions (%)
Raw feedlot steer manure	30	35
Wet SPF hog fuel	65	30
Corn silage	0	30
Fly ash	5	5
(b) Finished compost produced (tonnes)	1500	1323
(c) Composting cycle (weeks)	12–15	6–9
(d) Quality characteristics^a
N (% dry wt)	0.44 (0.001)	1.13 (0.001)
P (% dry wt)	0.18 (0.001)	0.7 (0.002)
K (% dry wt)	0.10 (0.001)	0.4 (0.003)
Organic matter (% dry wt)	46.9 (1.84)	40.3 (13.40)
pH	6.74 (0.09	6.87 (0.66)
C:N ratio (‘as is’ or wet wt)	13.1 (9.16)	19.88 (4.36)
Moisture (% ‘as is’ or wet wt)	58.83 (0.04)	52.83 (2.73)
(e) Field application of finished compost
Amount used as potting soil per season (tonnes)^b	150	n.a.
Amount applied to nursery fields per season (tonnes)	1350	1323
Application rate per season (tonnes a⁻¹)	100–120	39.375–45
Land area applied per season (Ha)	11.25–13.5	29.4–33.6

Source: Chen et al. (2021).

SPF: spruce pine fire; n.a.: not applicable.

Figures represent average values (and standard deviations) of laboratory samples of compost analysed in August and December 2021.

The tree and shrub nursery grower did not use fermentative compost for potting soil mix.

The compost data and values reported in Table 1 for the two compost systems evaluated are based on actual field application and trial data. The feedstock ingredients used in both composting methods include feedlot steer manure, wet spruce pine fire (SPF) hog fuel and fly ash. Corn silage was added to the fermentative composting blend, which reduced the percentage of wet SPF hog fuel in the mix. The composition of the feedstock ingredients used in both composting methods was based on actual proportions used by the commercial tree and shrub nursery grower in British Columbia, Canada. In general, bulk density is higher for fermentative compost than for thermophilic compost (Chen et al., 2021). Available nutrient N were higher for fermentative compost than the thermophilic compost produced. In addition, P and K nutrient levels were higher for the fermentative compost than for the thermophilic compost (Table 1). Further details about the physical and biochemistry characteristics of the two different composting systems are described in Chen et al. (2021).

The thermophilic and fermentative composts were produced and applied to tree and shrub nursery fields each year. The analysis for this study is based on compost production and field application data for 2021 and 2022. In this case study, 10% (or 150 tonnes) of thermophilic compost produced each year was used as amendment contributing to bulk in potting soil mix while the remaining 1350 tonnes of finished compost were applied to the tree and shrub nursery fields (Table 1, panel e). By comparison, all 1323 tonnes of fermentative compost produced were applied to a different section of the tree and shrub nursery fields. Compost from the two windrow methods is suitable not only for tree and shrub nursery production, but potentially for various horticultural and field crops, and landscaping. In addition, the thermophilic compost was formulated to slow vegetative growth and promote plant health and caliper development. Fermentative compost was spread over a larger area (29–33.6 ha) of tree and shrub nursery fields than thermophilic compost (11.25–13.5 ha), partly due to differences in chemical nutrient characteristics, especially NPK and C:N ratio (see Table 1, panel d).

Data and other information for determining the compost production costs are based on actual production and field application data by the commercial tree and shrub nursery grower. Thermophilic and fermentative composts were applied to the tree and nursery fields using a tractor and manure spreader, by one farm worker working for a total of 16 hours per season per compost type. Compost application cost was $4672.16 per season for each of the two compost types produced, whereas the rental cost for the tractor with manure spreader was $250 per hour. Total compost application costs include the rental costs of a tractor and manure spreader, diesel fuel cost and labour cost. Labour wage was $25 per hour, while the diesel fuel consumption rate was 12.6 L per hour and assumed to be purchased at the 2021 average price of $1.35 L⁻¹. Details about the compost production costs and related cost–benefit analysis, and overall economic viability are reported elsewhere (Chen et al., 2021), and not repeated here.

Compost benefits

In a comprehensive review of the literature, Martínez-Blanco et al. (2013) classified compost benefits in agriculture and horticulture as short-, medium- and long-term based on duration of the agronomic and management effects (Figure 1). In general, compost benefits to plant and soil systems include improved nutrient supply, carbon sequestration, pest and disease suppression, improved soil workability, increased biodiversity, higher crop nutritional quality, increased crop yield, reduced soil erosion and better control of soil moisture (Martínez-Blanco et al., 2013). This study focused on short- and medium-term benefits, partly due to lack of data on long-term impacts. Thus, the quantified compost benefits should be considered as conservative estimates. The period considered aptly covered the production cycle of the composting methods studied and, more importantly, growing cycle of the tree and shrub nursery plants.

Figure 1.

Potential compost benefits to plant and soil systems.

The specific compost benefit types and explanation of how the economic values were estimated are summarized in Table 2. The monetary values were quantified based on 2021 data from a case study of tree and shrub nursery production and sale in British Columbia. Other estimated economic values included savings or opportunity cost of NPK nutrients supplied from compost use as a growing medium in a potting soil mix for nursery trees and shrubs. The retail market value of NPK nutrient fertilizer was used to quantify the value of NPK chemical nutrients in the compost produced. Similarly, the value of increased soil organic matter (SOM) in improving soil moisture and water holding capacity was quantified in terms of cost savings in reduced irrigation water use and associated labour and machinery costs by the tree and shrub nursery grower. In addition, compost use benefits associated with disease and pest control was quantified in terms of cost savings in chemicals used for disease and pest control by the tree and shrub nursery grower. Branch pruning benefits associated with compost use was considered in the study because pruning is important in tree and shrub nursery production and entails labour costs. Branch pruning helps to correct for aspect ratio and improve balanced growth (Sæbø and Ferrini, 2006). In this study, compost application improved balanced plant growth and required less pruning, with associated cost implications. Reduced pruning linked to compost application was quantified in terms of labour cost savings and reduced pruning lift usage by the tree and shrub nursery grower.

Table 2.

Summary of methods for estimating selected non-market compost benefits: application to ornamental nursery horticulture production.

Compost benefit type	Benefit estimation/valuation	Application of estimation method to tree and shrub nursery production
Medium in potting soil mix	Cost savings in terms of opportunity cost	Retail value of compost component contributing to bulk in potting soil mix
Chemical nutrients (mainly nitrogen, phosphorous, and potassium (NPK))	NPK nutrient value, according to compost type and quality	Retail value of NPK nutrients in compost
Increased SOM: improved soil moisture and water holding capacity	1% improvement in SOM translates to savings: 20,000 gallons of water per acre	Cost savings in reduced irrigation water usage and related labour and machinery cost
Increased plant yield	Reduced cull (i.e. plant) loss rate with compost	Gross margin from additional plants sold from each production cycle. Also, time value of money
Improved plant performance	Reduced years to complete a plant production cycle	Benefits (i.e. Gross margin) associated with reduced growing cycle of tree and shrub nursery plants. Also, time value of money
Disease and pest control	Reduction in chemicals used for disease and pest control	Cost savings in chemicals used for disease and pest control
Weed suppression and control	Reduction in chemicals used for weed suppression and control	Cost savings in chemicals used for weed suppression and control
Branch pruning	Reduced pruning with compost application	Cost savings on labour and less pruning lift usage

Source: Non-marketed economic valuation methods for specific benefits were adapted from Council of Rural Research and Development Corporations (2018) and Nunes et al. (2009).

SOM: soil organic matter.

Compost benefits estimation methods and assumptions

Important assumptions and key technical data and parameters used in the NPK nutrients valuation and analysis are summarized in Table 3. Compost benefits such as improving soil moisture and water holding capacity requiring less irrigation, disease, weed and pest control, reduced branch pruning from improved nursery plant growth and improved plant yield performance were evaluated and quantified with and without compost application to the tree and shrub nursery plants. Chemical nutrient benefits from compost were measured directly in terms of NPK amount in the compost. Laboratory analysis of compost samples conducted as part of the larger research project was used to determine the amount of NPK and then multiplied by NPK retail price. NPK levels in the compost produced were estimated using the AgriSuite Organic Amendment decision tool (Ontario Ministry of Agriculture, Food and Rural Affairs, 2022). The available average NPK levels by compost production method are summarized in Table 3. For example, available N estimated using AgriSuite Organic Amendment decision tool was 548.85 g per tonne of thermophilic compost and 2100.13 g per tonne of fermentative compost. The retail price of compost was based on a cost-based pricing or break-even price, and estimated as part of a larger research project (Table 3). The selling price of the compost produced was the same for thermophilic and fermentative compost, and consistent with the observation in the compost use and retail market in the study area.

Table 3.

Estimated nitrogen, phosphorous, and potassium (NPK) nutrient amounts in compost sample, and compost price.

Available nutrients	Thermophilic		Fermentative
Available nutrients	AgriSuite organic amendment tool estimate (g per tonne of finished compost)	Amount in 1350 tonnes of finished compost (tonne)	AgriSuite organic amendment tool estimate (g per tonne of finished compost)	Amount in 1323 tonnes of finished compost (tonne)
N	548.85	0.74	2100.13	2.78
P	748.43	1.01	12,700.60	16.80
K	648.64	0.88	2150.03	2.84
Total NPK amount (tonne)		2.63		22.42
Compost price ($ per tonne)		37.34		37.34

SOM improves with compost application and potentiates soil moisture and water holding capacity and improved soil structure (Oldfield et al., 2018). This study only focused on soil water holding benefits due to data limitations with estimating the monetary benefits of improved soil structure. In the tree and shrub nursery case study, SOM doubled from 3% to 6% with compost. SOM benefits can be estimated in terms of cost savings from reduced irrigation water, and related labour and machinery cost for irrigation. However, in this case study, data were not available because the nursery operator was unable to increase water supply without compost due to labour constraints. As a result, the SOM benefit was not explicitly quantified in this analysis and assumed to be indirectly captured in terms of nursery plant yield and performance.

Tree and shrub nursery plant yield and performance were estimated in terms of reduced cull (i.e. plant) loss and benefits associated with reduced length of the production cycle due to compost application. The nursery plant cull loss rate was 8% with compost and 15% without compost application (Table 4). Planting density was 600 nursery plants per acre (or 1500 plants ha⁻¹), which resulted in an extra 42 nursery plants per acre (or 104 plants ha⁻¹) sold with compost use due to reduced cull loss. In addition, nursery plants were ready for marketing every 4 years with compost application, and about 5–6 years without compost application and no added chemical fertilizer. Thus, for every 12 years (representing the least common multiple of 4 and 6), for example, three cycles of nursery plants are sold compared to two cycles without compost application (Figure 2). The 12-year period considered is also within the typical 10–15 years range of the useful life of a compost plant (Oliveri et al., 2023).

Table 4.

Summary of technical data and parameters for selected benefits of compost application in tree and shrub nursery production.

Benefit	Without compost	With compost	Difference/benefit
(a) Non-marketed benefits
Compost in potting soil mix (tonnes)	n.a.	150	$37.34 per tonne in savings
Nitrogen, phosphorous, and potassium (NPK) nutrients (kg)	n.a.	(i) 263 for thermophilic(ii) 2242 for fermentative	$37.34 per tonne of NPK in value
Improvement in soil organic matter (%)	3	6	No savings due to labour constraints; nursery unable to increase water supply without compost.
Plant cull loss rate (%)	15	8	Additional 105 nursery plants per hectare per planting cycle survived and sold; Gross margin of $90 per tree
Tree nursery production cycle (years per cycle)	5 to 6	4	(i) Cost savings associated with 2 years reduction in tree nursery growing cycle at $17.50 per tree per year per cycle(ii) One extra cycle of plants for every 12 years; gross margin at $90 per tree
Disease, pest, and weed reduced	Chemical cost at $1166.66 per hectare per year	Chemical cost at $583.33 per hectare per year	Chemical cost savings was $583.33 per hectare per year
Reduced branch pruning hours	(i) 57.35 hours per hectare per year(ii) $84.7 per hectare per year	(i) 44.12 hours per hectare per year(ii) $55.05 per hectare per year	(i) Labour time decreased by 13.23 hours per hectare per year(ii) Cost of pruning lift reduced by $29.65 per hectare per year
(b) Other
Break-even price of thermophilic compost ($ per tonne)			37.34
Planting density/rate (number of nursery plants per hectare )			1500
Average growing cost per nursery plant per year ($ per nursery plant)			17.50
Average gross margin realized with compost application ($ per nursery plant)			90.00

a: not applicable.

Figure 2.

Illustration of production cycles with and without compost application to tree and shrub nursery. (a) Tree and shrub nursery plants production cycle with compost application. (b) Tree and shrub nursery plants production cycle without compost application.

Benefits associated with the reduced cull loss rate were estimated as gross margins from additional plants sold per nursery plant production cycle. Gross margins were estimated in terms of sales revenue per nursery plant less the cost of tree liner and annual cost to grow each nursery plant, and then aggregated for the total tree and shrub nursery plants. It was assumed that other tree and shrub nursery production costs were similar with and without compost application. Gross margin per nursery plant with compost application was $90 (Table 4). Thus, the extra 42 nursery plants per acre due to a lower cull rate yield generated $3780 in gross margins at the end of each tree and shrub production cycle.

The reduced growing cycle of tree and shrub nursery plants resulted in two benefits: (i) cost savings associated with a shorter cycle (by 2 years) with compost application and (ii) returns from an extra cycle of nursery plants sold for every 12 years. For example, with no compost application, 510 nursery plants per acre (or 1260 plants ha⁻¹) are sold at the end of every 6 years. With compost application, the 510 nursery plants are market-ready 2 years earlier, which saves 2 years of growing cost, at $17.50 per nursery plant (Table 4). Cost savings for the extra 42 nursery plants per acre due to a reduced cull loss rate with compost included in the gross margin of $90 per plant. Thus, to avoid double counting, cost savings due to a reduced growing cycle estimated only the savings on the number of plants without compost (i.e. 15% cull loss rate). In addition, due to differences in growing cycles with and without compost, there was one additional growing cycle with compost every 12 years, which generated additional gross margins of $90 per plant.

Benefits associated with nursery plant yield and performance are incurred in future years. The present values of estimated benefits were determined and compared per unit area of tree and shrub nursery production according to composting method. As previously noted, a 12-year production period was chosen for the analysis because it is the least common multiple of 4 and 6. For a 12-year production period, benefits associated with reduced cull loss rate, and cost savings associated with the reduced growing cycle will occur during years 4, 8 and 12 (Figure 2).

Compost benefits associated with disease, pest and weed suppression were quantified as cost savings in chemical use by the nursery plant producer, at $233.33 per acre (or $576.33 ha⁻¹) per year. Reduced branch pruning with compost application was quantified as cost savings on labour and pruning lift equipment rental costs. Farm labour wage was $25 per hour. Labour savings on branch pruning was $5.294 per acre (or $13.08 ha⁻¹) per year, and $11.86 per acre (or $29.29 ha⁻¹) per year savings on pruning lift equipment rental.

Given the differences in chemical nutrient characteristics of the two compost types, the nursery grower applied 1350 tonnes of thermophilic compost to 34 acres (or 13.78 ha), whereas 1323 tonnes of fermentative compost were applied to 84 acres (or 34.01 ha) of the nursery fields. The nursery grower used 10% (or 150 tonnes) of thermophilic compost produced as an amendment (contributing to bulk) in potting soil mix. The thermophilic compost component in the potting soil mix was valued at $37.34 per tonne.

The present value of benefits associated with compost type i, (PV_i), was calculated as discounted net benefits using the relationship:

{PV}_{i} = \sum_{t = 1}^{12} (\frac{B_{i t}}{{(1 + d)}^{t}})

(1)

where B_it represents net benefits associated with compost type produced using windrow method i [i = 1 for thermophilic method, and i = 2 for fermentative method] during year t, and d represents the discount rate.

Mathew (2006) noted that discount rate (d) may be determined as a function of the nominal interest rate (I) and the inflation rate (r):

d = (\frac{1 + I}{1 + r}) - 1

(2)

The nominal interest rate (I) was estimated as 4.95%, which was based on the 20-year (2000–2020) average prime rate plus 1% (Bank of Canada, 2021). On the other hand, the inflation rate was assumed at 1.63%, based on the 20-year (2000–2020) average inflation rate for the province of BC (Statistics Canada, 2021). Based on equation (2), the discount rate (d) was calculated as 3.2667%.

Results and discussion

Total benefits were quantified and compared for thermophilic and fermentative compost applied in terms of economic value: (i) per tonne of finished compost applied per year and (ii) per tonne of compost applied per hectare (Table 5). In general, the quantified non-marketed benefits per unit weight of finished compost were higher for fermentative compost than for thermophilic compost (Table 5), primarily due to differences in physical and chemical characteristics of the compost types noted earlier. On the other hand, the estimated economic values of benefits were similar on a per unit nursery field area basis for each compost benefit type, and this was consistent for both thermophilic and fermentative compost. The main reason was that the total amount (in tonnes) of compost applied to the nursery fields were similar; that is, 1350 tonnes of thermophilic compost versus 1323 tonnes of fermentative compost.

Table 5.

Estimated monetary benefits of compost application to tree nursery production, according to composting method.

Compost benefit type	Thermophilic compost (1500 tonnes of which: 150 tonnes as medium for potting soil, and 1350 tonnes in field application)		Fermentative compost (1323 tonnes in field application)
Compost benefit type	$ per tonne of finished compost per season	$ per tonne of finished compost per year per hectare	$ per tonne of finished compost per season	$ per tonne of finished compost per year per hectare
Medium contributing to bulk in potting soil mix (per season per year)	37.34	n.a.	n.a.	n.a.
Chemical nutrient supply (i.e. nitrogen, phosphorous and potassium (NP)) (per growing season per year)	0.07	0.005	0.63	0.02
Improved plant yield and performance (present value over 12-year period)	144.84	10.73	360.50	10.73
Disease, pest, weed control (per growing season per year)	5.83	0.43	14.81	0.44
Reduced branch pruning (per season per year)	3.60	0.27	9.15	0.27
Total amount ($)	191.68	11.44	385.09	11.46

The tree and shrub nursery grower did not use fermentative compost for potting soil mix.

a: not applicable.

The total economic value aggregated for the compost benefit types considered was $191.68 per tonne of finished thermophilic compost applied per year, and $385.09 per tonne of fermentative compost applied (Table 5). Considering economic values associated with compost application to nursery fields, excluding benefits from thermophilic compost use as a medium in potting soil mix, total estimated benefits were $154.34 [=191.68–37.34] per tonne of thermophilic compost per year and $385.09 for fermentative compost per year. Of these totals, the monetary benefit associated with improved nursery plant yield and performance was $144.84 per tonne of thermophilic compost per year and $360.50 for fermentative compost.

Among the compost benefit types considered, improved nursery plant yield and performance accounted for 75% of total economic value for thermophilic compost and 93% for fermentative compost. Among the compost benefits to the nursery plant and soil systems considered, economic value was lowest for the chemical nutrient supply contributed by compost, at $0.07 per tonne of thermophilic compost per growing season compared with $0.63 per tonne for fermentative compost. The low nutrient value is consistent with the general use of compost for benefits other than the chemical nutrient supply to plant and soil systems in horticulture and agriculture (Environment Canada, 2013; Paulin & O’Malley, 2008).

The second highest estimated monetary value of compost was for disease, pest, and weed control and lower for thermophilic compost (at $5.83 per tonne of finished compost per growing season) compared with $14.81 per tonne for fermentative compost. Reduced branch pruning linked to compost application is important in horticulture (and probably less so in agriculture) and empirically demonstrated in the quantified benefits. Benefits associated with reduced tree and shrub branch pruning was $3.60 per tonne of thermophilic compost per year and $9.15 per tonne of fermentative compost. As noted earlier, the important benefit for the tree and shrub nursery grower was to correct plant aspect ratio and, ultimately, improve balanced tree and shrub growth, consistent with Loreti and Pisani (1990).

Summary and conclusions

Various studies have assessed important (individual) environmental and agronomic benefits of compost use to plant and soil systems for agriculture compared with other soil amendments and fertilizer types. However, research quantifying the monetary values of compost benefits is limited because such benefits are difficult to quantify in monetary units and, therefore, are often overlooked by growers. Most compost benefits in horticulture and agriculture are non-market benefits because such benefits are not directly bought and sold in a market. Thus, it is difficult to observe their prices or monetary values. This study quantified the economic values of selected compost benefits to plant and soil systems in tree and shrub nursery production. A use value method was applied in quantifying the non-marketed compost benefits. The framework allowed for estimating economic values, including cost savings with and without compost application for specific practices. The benefits were compared for compost produced using two different windrow methods, namely: thermophilic composting and fermentative composting.

The quantified total economic value of the compost benefits considered was $192 per tonne of finished thermophilic compost applied per season, and $385 per tonne for fermentative compost. Laboratory analysis of the compost samples conducted in 2021 was used for this analysis, and actual field application and trial data were for 2021 and 2022. Among the compost benefit types considered, improved nursery plant yield and performance accounted for the highest proportion of quantified benefits. In contrast, estimated monetary values were lowest for chemical (NPK) nutrient supply for both thermophilic compost and for fermentative compost. The quantified chemical (NPK) nutrient value relative to the other compost benefits is consistent with the general use of compost for benefits other than the chemical nutrient supply to plant and soil systems. This study empirically demonstrated that there are substantial non-market benefits to compost use that can influence decision-making by farmers and horticulturists. In this case study, the tree and shrub nursery grower applied 1350 tonnes of thermophilic compost and 1323 tonnes of fermentative compost in a growing cycle resulting in overall cost savings in their operation.

Caution in interpreting the results is important. For example, the analysis considered selected short- and medium-term compost benefits to tree and shrub nursery plant and soil systems and did not capture long-term benefits such as carbon sequestration. Thus, the monetary values could be considered as lower-bound estimates. In addition, the environmental and agronomic benefits derived from compost application to plant and soil systems are influenced by not only site-specific factors (such as weather and soil conditions) but also farming and production system type and conditions. Future research considering expanded environmental and agronomic benefits of compost (beyond those considered in this study), and applications in other agricultural production systems will be important.

Footnotes

Acknowledgements

The authors are grateful to Rico Torsten, Manager, Purple Springs Nursery and research collaborators at Vineland Research and Innovation Centre, Ontario, Canada, particularly Ryan Munroe.

Author contributions

Emmanuel K. Yiridoe: Conceptualization, Formal analysis; Funding acquisition; Methodology; Project administration; Resources; Writing – original draft; Writing – review and editing.

Qiaojie Chen: Data curation, Formal analysis; Methodology; Visualization; Writing – original draft.

Chidozie Okoye: Data curation, Formal analysis; Methodology; Writing – review and editing.

Alexandra Grygorczyk: Conceptualization; Funding acquisition; Project administration; Writing – review and editing.

Declaration of conflicting interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The research was partly supported by funding from Agriculture and Agrifood Canada (AAFC) under the Canadian Agricultural Strategic Priorities Programme (CASPP-025).

Ethical considerations

Not applicable.

Consent to participate

Not applicable.

Consent for publication

Not applicable.

ORCID iD

Emmanuel K. Yiridoe

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Quantifying non-marketed compost benefits for application in horticulture

Abstract

Keywords

Highlights

Introduction

Economic valuation of non-marketed benefits: A brief review

Research methods

Compost application

Compost benefits

Compost benefits estimation methods and assumptions

Results and discussion

Summary and conclusions

Footnotes

Acknowledgements

Author contributions

Declaration of conflicting interests

Funding

Ethical considerations

Consent to participate

Consent for publication

ORCID iD

References