Positive externalities, knowledge exchange and corporate farm extension services; a case study on creating shared value in a water scarce area

AbstractDespite much rhetoric about the 'greening business' agenda and various initiatives to promote the valuation of ecosystem services and natural capital, the corporate sector has been slow to integrate social and environmental factors into core business models and to extend this integration across their supply chain. Our effort to narrow this thematic and methodological gap focuses on the co-benefits and positive externalities that can be generated through progressive knowledge exchange between a corporation and its suppliers. Using a case study of contract farming of malting barley in water scarce Rajasthan (India), we examine the extent to which best practice agronomic advice given by corporate farm extension workers can help small scale farmers (suppliers) to increase income, improve resource efficiency (water, fertiliser, energy) and reduce greenhouse gas emissions. Findings from our desk study suggest positive results for all these variables, when compared to the regional benchmark of non-participating farmers. Under a scenario where advice is provided on all major crops (not just barley), we find a significant further increase of farm income. Our valuation of the reduced exploitation of ground water (alone) exceeds the advisors' annual salaries, suggesting that under full social and environmental accounting, the extension services are not a cost factor, but a profit making unit of the company. We discuss of our findings in relation to alternative approaches to PES and alternative investment strategies in green technologies