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Ecosystem Services for Wine Sustainability

A Case in Point of Sustainable Food Systems
  • Sukhbir SandhuEmail author
  • Claudine Soosay
  • Howard Harris
  • Hans-Henrik Hvolby
  • Harpinder Sandhu
Living reference work entry

Abstract

This study investigates the concept of ecosystem services in an Australian grape and wine company and explores risks and opportunities to achieve environmental sustainability in this organization. Ecosystem service approach is an emerging paradigm to address natural resource degradation and achieve sustainability in agribusiness organizations. A case study method is used to identify environmental issues at one of the premium wine organizations based in South Australia. This study conducts semi-structured interviews with multiple informants to analyze how this organization integrates ecosystem services approach in their management systems. These semi-structured interviews with multiple informants identified three categories of environmental issues: (1) primary (water use efficiency, soil health, carbon emissions), (2) secondary (energy, water availability), and (3) tertiary (waste water recycling, salinity in soil, loss of biodiversity, impacts due to climate change projections, winery waste management, soil carbon). We used Ecosystem Based Business Risk Analysis Tool (EBBRAT) and found freshwater availability as a major risk for this organization. This tool led to the identification of key areas, such as biological control of insect pests, maintaining biodiversity and management of soil, as an opportunity for the wine company to enhance sustainability. This study highlights ecosystem service approach to achieve sustainability in wine and other agribusiness organizations. This case study is followed by two interactive exercises to illustrate the application of the ideas discussed in the chapter. The chapter concludes with lessons learnt to develop sustainable food systems and some questions that reflect the ideas presented in the chapter and are aimed at shifting the focus toward food sustainability.

Keywords

Sustainable food systems Environmental management Ecosystem-based approach Ecosystem-based business risks and opportunities Ecosystem services Natural capital 

Introduction

Agriculture occupies one-third of the planet’s land area, producing food for increasing human population. At the same time, clearing of land for agriculture and agricultural intensification has been damaging the global environment and human health (MEA 2005; IPCC 2007, 2012; Wratten et al. 2013). This has resulted in the decline of life-support functions and processes widely known as ecosystem services (MEA 2005). Ecosystem services are the benefits obtained either directly or indirectly, from natural and managed ecological systems (Daily 1997; MEA 2005; Pascual et al. 2017). Ecosystem services also provide natural capital for large number of industries such as agriculture, timber industry, power generation companies, etc. (TEEB 2010). The degradation of the natural capital, followed by the decline in global ecosystem services, has become an important issue for governments, societies, and businesses throughout the world (Stern Report 2006). In response to the increased environmental performance demands from community, governments, and other stakeholders, the agriculture industry is being forced to consider a range of environmental management programs (Céspedes-Lorente and Galdeano-Gómez 2004). A new approach to capture, measure, compare, and communicate sustainability in agriculture involves using the concept of ecosystem services (MEA 2005). The study investigates the concept of ecosystem services in an Australian agribusiness organization (henceforth called wine company) and explores ecosystem-based risks and opportunities to achieve environmental sustainability in this organization.

Agribusiness and ecosystems are intricately linked (Hanson et al. 2008). For example, the food industry depends upon land and water resources for the production of grains, meat, fiber, horticultural products, etc. Implications of loss of ecosystem services for the natural resource-based industry such as agribusinesses are far more direct than for manufacturing industries due to their direct reliance on ecosystems and their services (Grigg et al. 2009; TEEB 2010; Sandhu 2010). Current research has, however, largely constrained itself to the environmental practices of visibly polluting industries such as the chemical, automobile, mining, and energy industries (Bansal and Hunter 2003; Nishitani 2009). Consequently, there is limited knowledge about the environmental practices adopted by agribusinesses (Magdoff and Foster 2000; Jansen and Vellema 2004). Agribusinesses include organizations that are involved in primary production of agricultural products (e.g., grains, milk, meat, wool, fruit, and vegetables), processing (e.g., cereals, dairy, wine, sugar industry), manufacturing (e.g., seed, fertilizers, agrochemical industry), and retailing (e.g., processed food, chocolate etc.). Being a natural resource-dependent industry, the agribusiness industry is extremely vulnerable to the effects of environmental and climate changes (MEA 2005; TEEB 2015). While environmental degradation can undermine economic development for business in general, agribusinesses are particularly vulnerable, as healthy and functional ecosystems underpin the continuity of agribusinesses (Sandhu et al. 2012; Houdet et al. 2012; TEEB 2015). There is thus an urgent need for examining the consequences of changing natural environment, declining natural resources, and the resultant impacts on agribusinesses (Maloni and Brown 2006; Hoffman 2007; Heyder and Theuvsen 2010). So far, agribusinesses have been responding to the regulatory, voluntary, market pressures to address the challenges of changing environment (WBCSD 2010; Houdet et al. 2012). However, due to increasing stakeholder pressure, organizations which are more directly reliant on natural resources now need an explicit focus on incorporating ecosystem services into their business decisions (Hanson et al. 2008; Sandhu et al. 2012). Experts are now suggesting that given the scale of changes happening in the natural environment, it will be difficult, if not impossible, to carry on agribusinesses without integrating environmental concerns into decision making (Gladwin et al. 1995; Shrivastava 1995; Dunphy et al. 2007; Hanson et al. 2008; Sandhu et al. 2010).

The global agriculture industry is the largest industry on the planet, with 1.3 billion people dependent on agriculture for their livelihoods, and contributes about $4 trillion in global GDP (about 6% annually – World Bank 2017). In Australia, agriculture contributes about 3–4% annually to the national GDP and consumes 65% of the total natural resources including land, water, and biodiversity (Beeton et al. 2006; Hochman et al. 2013). The total value of agricultural export was $31 billion in the year 2015–2016 (DFAT 2016). The five dominant agricultural enterprises in Australia are livestock, grains, wine, dairy, and horticulture. The Australian wine industry is the sixth largest export industry in Australia (with a 5.2% share of agricultural exports and contributes about $2 billion annually to agricultural exports – DFAT 2016). It has grown considerably since the 1990s. Australia, with 145,000 ha area under vineyards, is among the leading wine grape-producing countries, with 2.3% of the total global vineyard area. It produces 4.3% of the total global wine production and is the fourth largest wine exporters in the world. South Australia has the largest wine-producing area in Australia with over 70,000 ha under vineyards. Wine exports contribute over $1 billion every year to the state economy, second only to wheat exports. The South Australian wine industry was established in the 1840s, after the arrival of European migrants. Over the last few years, the wine industry is experiencing uncertainties in global markets due to oversupply, impacts of climate change, etc. (Hayman et al. 2007; SAWIC 2010). It is increasingly being recognized that while there is a need to maintain balance between demand and supply in the short term, the future focus has to be on improving competitiveness in the long term (ABARE 2006).

The wine industry, in particular, is actively exploring alternative approaches to enhance competitive advantage. One way of thinking about these environmental issues and identifying opportunities for improving practice is to consider the concept of ecosystem services. This study examines an organization from the South Australian wine industry. The choice of business from the wine industry was dictated by the fact that it is the dominant wine region in Australia and contributes significantly to the state economy and national wine exports.

In the following section, an overview of the application of ecosystem services approach to the wine industry is provided. The study used the case of a premium grape- and wine-producing company based in South Australia as an example of engaged sustainability in integrating the challenges posed by ecosystems to achieve wine sustainability. It identifies environmental issues that this organization is dealing within the production of grapes and wine making. It then captures ecosystem-based risks and opportunities in this organization using a modeling tool: Ecosystem Based Business Risk Analysis Tool (EBBRAT – Sandhu et al. 2012). Insights are also provided on how this organization integrates ecosystem services approach into their management system to achieve sustainability. The chapter concludes by discussing how sound policy and management of environmental issues and ecosystem service approach can help develop sustainable food systems.

Ecosystem Services Approach and Wine Industry

Ecosystem services approach integrates the ecological, social, and economic dimensions of managing natural resources by the wine industry (Sandhu 2010). It includes identification and classification of ecosystem services that are relevant to wine industry. This approach explores sustainable management of natural resources by the wine industry for the production of grapes and wine. Enhancement of ecosystem services can help develop sustainable agriculture and food systems (Wratten et al. 2013). Key concepts around sustainable agriculture and food systems used in the chapter are described in Box 1.

Box 1 Key Concepts in Sustainable Agriculture and Food Systems

Transformative agriculture and food systems. Current agriculture and food systems are focused on one measure of success, i.e., production per unit area. However, it ignores social and environmental impacts and dependencies of agriculture and food systems. These impacts include loss of biodiversity, pollinators, pollution of water ways, pesticide poisoning, negative impacts on human health, social inequities (lower wages of farm workers), poor well-being of farmers and their families, loss of heritage and traditional knowledge, etc. Therefore, in order to transform agriculture and food systems, there is a need to understand and evaluate all impacts and dependencies (Sukhdev et al. 2016). This evaluation can help develop appropriate policy response for minimizing environmental and health impacts and improving long-term social, environmental, and economic sustainability of agriculture and food systems.

Natural capital. Natural capital is described as the stock of natural resources that are extracted from nature for providing raw materials in manufacturing and other goods and services to sustain life (Costanza et al. 1997; UNU-IHDP and UNEP 2014). It is also known as the environmental or ecological capital. Examples include land, soil, water, air, biodiversity, etc.

Social capital. Social capital is defined as the networks together with shared norms, values, and understandings that facilitate cooperation within or among groups (Keeley 2007, p. 103). It includes social equity, societal interactions, social rules, norms, community customs, culture, etc.

Human capital. Human capital is defined as the knowledge, skills, competencies, and attributes embodied in individuals that facilitate the creation of personal, social, and economic well-being (Keeley 2007, p. 29).

True cost accounting. The current farm accounts only include costs associated with inputs such as fertilizers, pesticides, irrigation, labor, capital costs, etc. They do not account for any depletion of natural resources, greenhouse gas emissions, and associated environmental costs including damage to air, water, and biodiversity, social inequities, and impacts on health and any positive environmental benefits. This exclusion of social and environmental costs and benefits in the economic system often results in perverse outcomes such as wrong policies that favors short-term gains over long-term sustainability. Therefore, true cost accounting (TCA) is a tool that is used in environmental management accounting to include all costs and benefits associated with the production, distribution, and consumption of food (Bebbington et al. 2001; TEEB 2015).

Biodiversity. Biodiversity is the variety and variability of all living things on Earth. In agriculture, it includes above- and belowground genetic and species diversity and all the ecological processes that contribute to the production of food. All the crops and livestocks have originated from the wide genetic resources. Food, forage, and fiber production depend on functioning biodiversity which is often known as functional agricultural biodiversity (Gurr et al. 2004).

Ecosystem services. These are defined as the benefits obtained from natural and managed systems by human beings to support their livelihoods and well-being (Daily 1997). These include many categories of goods and services, for example, food, fish, timber, pollination, water regulation, waste treatment, soil erosion control, pest and disease suppression, cultural and recreational services, etc.

Payments for ecosystem services. Payments for ecosystem services (PES) are defined as a voluntary transaction where an ecosystem service is bought by a buyer from a service provider (UNDP 2017). PES mechanisms include incentives to land managers in exchange of managing their land for the provision ecosystem services.

Well-being. Human well-being is defined as the state of social and economic prosperity that leads to happiness and better health of individuals. In agriculture and food systems, it relates to better health of farm environment, animals, workers, and farming families. In the value chain, it includes better conditions for all workers in the processing and distribution of food and improved health of consumers.

The ecosystem services are currently in decline (MEA 2005), and it is of pressing concern for wine businesses because they rely on these ecosystem services for their continuity. However, since the wine industry can affect and be affected by ecosystem services, it is in a unique position to alleviate these challenges through a careful assessment of ecosystem service dependence and usage (Athanas et al. 2006; Genier et al. 2008; Houdet et al. 2012). It is therefore not surprising that stakeholder groups are increasingly pressurizing wine businesses to address these challenges.

Being a land-based industry, the wine industry is dependent on the services provided by healthy and functional ecosystems. The wine industry depends on four categories of ecosystem services: provisioning, regulating, supporting, and cultural services (De Groot et al. 2002; MEA 2005; Boyd and Banzhaf 2007; Wratten et al. 2013; CICES 2017). The provisioning, regulating, and supporting ecosystem services contribute to natural capital, while cultural ecosystem services contribute toward social and human capital. Natural capital includes well-functioning biodiversity and ecosystems, social capital constitutes societal interactions, relationships, formal and informal institutions, and human capital includes skills and knowledge (UNU-IHDP and UNEP 2014). The wine industry includes grape-growing and wine-making operations. The ecosystem services associated with these two operations in the wine industry are discussed briefly below (Table 1).
Table 1

List of ecosystem goods and services associated with agribusiness organizations and wine industry

 

Agribusiness organizations

Wine industry

Provisioning services

1. Crops food crops (grains, oilseed, tea, coffee, vegetables, cocoa (chocolate products), coffee beans (coffee drink), seed (seed crops), horticultural products (fruits))

2. Livestock (meat), milk (milk products)

3. Capture fisheries and aquaculture (fish, prawns, shrimps)

4. Wild foods (non-timber food products)

5. Timber and other wood fiber

6. Other fibers (cotton, hemp, silk)

7. Biomass fuel

8. Freshwater (irrigation, drinking water)

9. Genetic resources (plant breeding)

10. Biochemicals, natural medicines, and pharmaceuticals (medicinal plants)

1. Wine grapes

2. Wine

3. Vine varieties

4. Freshwater availability

Regulating services

11. Air quality regulation (greenhouse gas regulation: Emission reduction through supply chain management)

12. Global climate regulation (climate regulation: Carbon emission reduction)

13. Regional/local climate regulation

14. Water regulation (water regulation: Water use efficiency)

15. Erosion regulation (soil erosion control: Payments to upstream users for improving watershed services)

16. Water purification and waste treatment

5. Pesticides drift management

6. Carbon sequestration by above ground and below ground biomass

7. Water use efficiency

8. Maintaining soil cover with vegetation for managing soil erosion

Supporting services

17. Disease regulation (biological control)

18. Pest regulation (biological control: Natural enemies, pheromones, etc.)

19. Pollination (pollination: Horticultural products)

20. Mineralization of plant nutrients (nutrient cycling: Fertilizer)

21. Soil formation

22. Nitrogen fixation

9. Natural disease control

10. Natural pest control

11. Nutrient cycling with soil management

Cultural services

23. Recreation and ecotourism (ecotourism

(nature’s trail, camping in outback), recreation (visits to national parks, bird watching))

24. Ethical values (social welfare schemes by business in local communities)

25. Aesthetic information

26. Cultural and artistic values

27. Historical values

28. Science and education values

29. Employment

12. Wine tourism

13. Ethical wine

14. Employment to locals

Provisioning services include goods and services produced by ecosystems. The wine industry is highly dependent on ecosystem goods (grapes) which are produced in vineyards. Wine grapes and wine are the final products under this category associated with the wine industry.

Regulating services include ecosystem services that regulate climate, air quality, soil erosion, etc. In the wine industry, regulating services support production of wine grapes. In vineyards, large amounts of agrochemicals are used to control pests/diseases and to supply nutrients to vines. Good management practices can minimize pesticide drifts and impacts on air quality and leaching of excessive nutrients into soil.

Supporting services include processes that support the production of provisioning services. In the wine industry, these are nutrient cycling, biological insect pest/disease control, etc. These ecosystem services support the provision of goods and services such as wine grapes. Nutrient cycling is managed in vineyards by better soil management using organic composts. Biological control of insect pests is enhanced by providing a habitat to the natural enemies of insect pests.

Cultural services include the aesthetics and recreational component of ecosystems. In wine industry these include recreation, wine tourism, ethical values, etc. The wine industry is largely dependent on wine tourism to earn revenue from the visitors, through wine sales, and also to improve sustainable wine image for marketing advantage.

A case study method (Yin 2003) is used to identify environmental issues at one of the premium wine organization based in South Australia. Ecosystem-based risks and opportunities are identified in this organization using the Ecosystem Based Business Risk Analysis Tool (EBBRAT; Sandhu et al. 2012). It also analyzes how this organization integrates the ecosystem service approach into their management system to achieve sustainability.

Engaged Sustainability at Grape and Wine Organization

Wine Company

The wine company in this study belongs to the exclusive group of Australia’s First Families of Wine (a group of 12 family-owned Australian wineries – AFFW 2017). The case study organization established their first vineyard and wine-producing unit dating back to the early 1860s. The wine-producing company is one of the premium grape- and wine-producing company (hereafter, wine company) based in South Australia. A descriptive and in-depth case study approach is used to examine how ecosystem services approach can help in achieving environmental sustainability in this wine company. A single case study method was used to study environmental issues in this wine company as it allows in-depth examination of the general issues associated with the industry. Moreover, tools and analysis of ecosystem-based risks and opportunities are not being applied widely in the wine or agribusiness industry. This case is intended to develop context-dependent knowledge and management systems to improve environmental sustainability and apply ecosystem services approach in the industry.

Environmental Issues

Quality wine grape production depends upon adequate supply of natural resources such as water, soil, and sunshine. Apart from quality soil and water resources, healthy and functional ecosystems are also required for quality wine production. For example, grape growing requires nutrient supply by soil, moisture in the soil profile, and suppression of insect pests, weeds and diseases, etc. Degradation of these functions, loss of biodiversity and, declining natural resources (including impacts on water resources) pose a number of risks to the continuity of grape production in vineyards. Therefore, the tool used in this study (EBRAT) integrates ecosystem services into identifying risks and then developed strategies to improve environmental sustainability. An in-depth analysis of the environmental issues that the wine company has to deal with using semi-structured interviews is examined. This information was supplemented by information obtained from the company website, business publications, and brochures of the company. These in-depth interviews were conducted with the key staff (production manager, environmental manager, vineyard and winery staff) over the period December 2008 to December 2010. The initial interviews were conducted to understand and identify the key issues that this company has to face regarding environment and ecosystems. The discussion was around key topics: (1) What are the environmental issues at your organization? (2) Do you think there are environmental issues related with value chain in your organization? (3) Does your organization have impact/dependence on ecosystems? Subsequent interviews were primarily focused on understanding the processes to deal with the issues identified in the previous interview and included questions such as (1) how do you deal with these issues? and (2) why do you want to deal with these issues?

The analysis of the interviews led to the identification of the major themes relating to the vineyards and wine-making operations at the wine company. In accordance with the methodology suggested by Riemen (1986), meanings were then formulated from the significant statements. These formulated meanings were arrived at by reading, re-reading, and reflecting on the significant statements in the original transcription to get the meaning of the statements in the original context. The key issues were then divided into three categories – primary, secondary and tertiary issues with primary being the most pressing issues.

Ecosystem-Based Risks and Opportunities

Ecosystem-based risks and opportunities associated with the wine company using the Ecosystem Based Business Risk Analysis Tool are examined (EBBRAT; Sandhu et al. 2012). EBBRAT is a modeling tool which allows agribusinesses to assess their current reliance on ecosystem services. It helps organizations to identify ecosystem-based risks and opportunities and develop strategies for responding to the increasing demands to improve environmental performance (Sandhu et al. 2012). EBBRAT seeks to qualitatively and quantitatively explore and identify the risks and opportunities that agribusiness face because of their dependence on ecosystem services. EBBRAT consists of a database of relevant ecosystem services with their description and examples. It uses Microsoft Excel spreadsheet for inputs and outputs. It comprises four categories of ecosystem services based on the MEA. These four categories are subdivided into 29 ecosystem services (Table 1).

A firm’s dependence and impact on ecosystem services is entered into a data entry sheet. Dependence of a particular ecosystem service relevant to the firm’s performance is measured on a scale, ranging from 0, which indicates no relevance, to 10, which is highly relevant. The firm’s impact is quantified as either positive, negative, or no impact on a scale of −10 to +10. A positive impact indicates that the company’s operations improve the ecosystem services, whereas a negative impact indicates that it results in the decline of ecosystem services. These responses are generated in the output worksheet, and data are automatically organized in the analysis sheet into different dependence categories and different impact categories with different color schemata. A graph is then generated showing the risks and opportunities based on impact dependence profiles of ecosystem services. Risks increase toward the bottom right side of the graph as company’s operations are dependent on these ecosystem services and impact negatively on them, whereas opportunities increase toward the upper right corner of the graph as a company’s operations are positively impacting on the ecosystem services involved. Overview of the steps involved in the use of EBBRAT are summarized in Fig. 1 (adapted from Ranganathan et al. 2008). In this case, these steps were carried out with the team consisting of an environmental manager, two operational managers of vineyards, and one staff from winery operations. Database of ecosystem services prepared by the United Nations Environment Program led project the Economics of Ecosystems and Biodiversity (TEEB 2010) and the Ecosystem Services Partnership (ESP, https://www.es-partnership.org/) was used in this study. These are publicly available databases. First, database of ecosystem services related to agriculture and natural systems was explored to identify relevant ones for wine industry especially those which are associated with grape growing at vineyard level. Several ecosystem services (n = 29) associated with grape growing and wine production were screened out of these global databases (Table 1). For each ecosystem service, the magnitude of dependence was estimated by the team relevant to the wine company on a scale of 1–10. Similarly, all negative and positive impacts of wine operations on each ecosystem service were estimated on a scale ranging from −10 to +10 by the team. This exercise provided an estimation of the impact and dependence on each ecosystem services. All the positive impacts provided opportunities for the wine company to further explorations, whereas the negative impacts pointed toward risks.
Fig. 1

Overview of the steps involved in the use of EBBRAT to assess risks and opportunities in the wine company

The next section presents the findings.

Ecosystem Service Approach in a Wine Company

Findings are provided across the two main themes that illustrate the case of ecosystem service approach to achieve sustainability in the wine company. First, key environmental issues in the wine company relating to vineyards and wine production aspects are identified. These were classified into three categories: primary, secondary, and tertiary issues based on their importance. Second, ecosystem-based risks and opportunities were identified by the application of EBBRAT. These results were used to develop measures to adopt ecosystem services approach, which was then employed to improve sustainability at this wine company.

Identification of Environmental Issues

On the basis of in-depth interviews in this organization, environmental issues were classified into three categories – primary, secondary, and tertiary based on their importance (Fig. 2).
Fig. 2

Identified environmental issues, processes to deal with them, and major drivers of environmentalism at the wine company. On left side, each arrow indicates the process that deals with a particular environmental issue. On the right side, arrows indicate the type of driver that addresses each category of the environmental issues

Water use efficiency , soil health , and carbon emissions were regarded as the primary issues because stakeholders such as community, regulations, and international markets (buyers and suppliers) considered these issues very important (Fig. 2). Secondary environment issues identified in this company were energy and water availability (Fig. 2). There is a high impact on the business bottom line due to these environmental issues as they have significant costs involved. Tertiary issues identified were waste water recycling, salinity in soil, loss of biodiversity, impacts due to climate change projections, winery waste management, and soil carbon (Fig. 2). Five key drivers were also identified that drive environmentalism at the wine company. These were regulations, bottom-line impact, community pressure, international markets, and organizational culture. Regulations, community, and international markets help to address primary environmental issues. Bottom-line impact and community pressure addresses secondary environmental issues. International markets and organizational culture drive addressing of tertiary environmental issues. Five different processes were also identified that are being used to deal with the identified environmental issues. These were improving soil health, using native vegetation, using green energy, reusing winery waste water, and planning for climate change.

Identification of Ecosystem-Based Risks and Opportunities

Ecosystem services relevant to grape growing and wine making were analyzed using EBBRAT to identify risks and opportunities in this wine company (Fig. 3). The wine company was highly dependent on some key provisioning services (wine grapes, wine, vine varieties, freshwater availability), regulating services (pesticide drift management, carbon sequestration by vegetation, water use efficiency, maintaining soil cover), supporting services (disease/pests regulation, nutrient cycling), and cultural services (wine tourism, ethical wine, local employment). The impacts of grape growing and wine making on these ecosystem services were also identified which led to the identification of key risks through this tool.
Fig. 3

Ecosystem-based risks and opportunities output by EBBRAT in the study organization. Arrows showing the risks and opportunities based on impact and dependence profiles. Risks increase toward the bottom right corner. Ecosystem services that are in this area are at risk due to company operations and also tend to impact negatively on the production. Opportunities increase toward the top right corner

Freshwater availability was the key high-level risk, identified in this study using EBBRAT. Grape growing and wine making involve large use of freshwater for irrigation and processing, respectively. Due to prolonged drought and low-rainfall region, freshwater availability was identified as one of the major risks to the continuity and sustainability of their operations. Global climate regulation (variability and change) pose great risks to the overall shift in seasons, rainfall patterns, pest pressure, and availability of other resources required to continue grape and wine production. The intensity of this risk was assessed as medium as the organization has opportunities to develop management action plan to mitigate this risk. Other risks identified in the medium category were greenhouse emissions and energy use. Low- to medium-intensity risks identified in the study were due to chemical pollution (use of agro-chemicals), soil erosion in vineyards, and soil health issues. These are considered as low-to-medium intensity as best practices to manage vineyards can be adopted in a short period of time to address these risks. Availability of workforce in vineyard and wine-making facility was considered low-risk areas as this organization has permanent employees and relatively stable access to seasonal labors during grape harvesting and wine-making time.

EBBRAT also led to the identification of some opportunities where this company can invest and develop management options to deal with those risks. For example, in the management of insect pests/disease through biological control, soil nutrition by using mulches to improve nutrient cycling, management of soil erosion by cover crops and mulching practices. Biodiversity in the vineyards can be enhanced by planting native plants and shrubs in the surrounding. This will not only enhance aesthetics but also help in bringing back biodiversity in the landscape. This wine company can invest in creating markets for biodiversity and develop ecotourism based on these measures.

Based on this assessment of risks and opportunities available, this wine company has undertaken strategic measures to adopt ecosystem services approach to improve vineyard sustainability (Table 2). This wine company has taken several measures to respond to these pressures due to their reliance on natural resources. This response not only helped them to manage ecosystem services but also improve their business bottom line and sustainability (including associated natural, social, and human capital ). Management of freshwater by extending dams to store rainwater facility allows them to use water during the dry summers and save on costs associated with buying water and also reducing emissions related in transporting it to the site. Climate adaptation has been a major strategy to keep producing good wine grapes from more than century-old vineyards and maintain quality in the wines.
Table 2

Ecosystem-based risks identified by using EBBRAT, their intensity and measures adopted by the wine company

Ecosystem-based risks

Intensity

Measures

Freshwater availability

High

Rainwater harvesting dam extended

Global climate regulation

Medium

Planning for adoption to climate variability

Started operation in high rainfall zone

Greenhouse gas emissions

Medium

Capturing carbon through tree (biodiversity) plantings

Energy

Medium

Planning to include “green” energy sources for wine making

Chemical pollution (pesticides, herbicides)

Low to medium

Adoption of organic/biodynamic practices for pests and disease control

Integrated pest management

Ecosystem services strategies adopted in “the vineyard ecosystem management” project

Soil erosion

Low to medium

Inter-row vegetative cover throughout the year by native plants (Danthonia species and saltbush)

Soil health

Low to medium

Under-vine floor management using organic compost and mulches

Employment

Low

Employing locals for casual and permanent positions

The wine company has also extended grape growing through establishing new vineyards in cooler area which are more resilient to climate impacts and erratic rainfall patterns. To enhance biodiversity and respond to the community needs, native trees and plants are being planted near vineyards. Other responses include planning for “green” energy (solar and wind), less reliance on coal energy, managing insect pests using biological control methods, and incorporating organic/biodynamic principles in vineyard management.

Management and Policy Outcomes

There are three major outcomes of this study. First, environmental issues in wine company were identified. Second, ecosystem-based risks and opportunities were identified for the wine company. Based on these, this wine company has successfully adopted strategic measures to achieve sustainability. The third outcome is that the findings are potentially transferable to other organizations that operate in a similar context (i.e., agribusiness organizations).

Management of Environmental Issues

As governments and people start to respond to the urgency of the environmental issues, agribusinesses are being pressurized to adopt sustainable development principles (WBCSD 2009, 2010; IFC 2012; Houdet et al. 2012). The interviews with the staff at the wine company indicated that the primacy of the issues was dictated by stakeholder pressure. In this study, various environmental issues were identified (Fig. 2) because stakeholders such as community , regulators, and international markets (buyers and suppliers) considered these issues as being very important. The other issues identified in this study (such as improving water use efficiency, maintaining soil health and carbon emissions) are also strategic issues for the continuity of grape production at this organization. The primacy of these issues is driven by pressure to maintain the bottom line and pressures by community groups, markets, and culture at the organization (Fig. 2). For sustainable wine production, continuous supply of good-quality grapes is required. Their production depends on quality of soil, freshwater availability for irrigation, maintenance of pests in vineyards, and adaptation to changing climate. The issues identified in this study were aligned to the production objectives of the wine company in this study. Waste water , winery waste management, and biodiversity are important local issues as the rural community is very concerned about them. This organization works with local community and keeps other stakeholders informed about the decisions that may impact local biodiversity and water resources .

Processes to deal with the environmental issues are also identified (Fig. 2). Primary issues such as water use efficiency can be dealt with water recycling process. Soil health issues can be managed by improving soil fertility through compost and mulches. Carbon emissions from vineyard machinery use and wine-making operations can be managed by considering green energy options. Green energy options and recycling winery water were the two processes identified to address secondary issues. Tertiary issues were mostly operational issues in managing vineyards and in wine-making operations. The culture at this organization is inclusive and community participation (in field days, wine and food festivals, etc.) helps in identifying and providing solutions to such issues which involve workers and local community. Recycling of winery waste and water, native vegetation management and replanting, and climate adaptation planning were the major processes put in place to deal with these issues.

Management of Ecosystem-Based Risks and Opportunities

One of the key objectives of this study was to help wine companies understand the risks and opportunities that arise out of their dependence on ecosystem services to achieve sustainability. Ecosystem services approach helped this organization identify and manage risks and opportunities due to ecosystem change. Ecosystem services approach has thus enabled this wine company to better manage the natural resources on which they rely (Fig. 3). Some of these concepts are successfully used by the wine industry to enhance ecosystem services such as biological control of pests and improvement of soil health as demonstrated in the Box 2.

Box 2 Sustainable Wine Production by Enhancing Ecosystem Services in Vineyards

Below are two examples of successful improvement in two ecosystem services, biological pest control and soil health.

Enhancing biological pest control. Light brown apple moth (LBAM, Epiphyas postvittana) is a serious pest in grapevines as its caterpillars roll shoots and feed on leaves and bunches causing reduction in grape yield and quality. This can cause significant economic damage. Conventional vineyards depend on pesticide to prevent losses. However, agrochemical use results in negative impacts such as loss of biodiversity, pesticide poisoning, and spray drift and is prohibited in certified organic vineyards. Therefore, management practices that can enhance natural pest control ecosystem services to manage such pests are required. A successful example is from the New Zealand wine industry, where growing strips of flowering buckwheat between vine rows decrease leafroller caterpillar population (Scarratt et al. 2008; Wratten et al. 2013). A small investment in growing buckwheat crop in vine rows results in increased number of beneficial parasitoid wasps that attack grape-feeding caterpillars and keep pest numbers under control. Buckwheat flowers provide nectar for the parasitic wasps and habitat for their survival.

Improving soil health. Soil heath is critical for sustainable agricultural production. Wine quality is also known to be affected by a number of environmental factors which are reflected in its terroir. Vineyards prefer deep soils with high microbial biodiversity and organic matter. High organic content leads to better microbiology of the soil, which leads to better nutrient cycling (Winkler et al. 2017). Soils with high organic matter have high water holding capacity. During dry period, this is extremely helpful in maintaining soil moisture. There are several plant diseases causing microbes that survive in soil during dormant season and transmit disease during ambient conditions. In vineyards, under-vine management can lead to suppression of the disease-causing microbes (Jacometti et al. 2007). Mulching with grass and compost can improve disease suppression ecosystem services (Wratten et al. 2013).

Mismanagement of ecosystem services can pose potential risks in the wine industry due to its high dependence and negative impacts. This case study developed risk and opportunity profile of a wine company and showed how strategic measures can be helpful in the governance, strategy, implementation, and reporting for long-term sustainability at the organization.

While several other tools are also available to assess ecosystem services such as ecosystem service review (ESR; Hanson et al. 2008) and Multiscale Integrated Models of Ecosystem Services (MIMES; Boumans and Costanza 2007), these are limited in their application and do not identify risks and opportunities as is by EBBRAT. EBBRAT identifies ecosystem-based risks that an organization has to deal with and also helps specify solutions to mitigate these through the adoption of ecosystem-based strategies (Houdet et al. 2012).

The ecosystem services approach, discussed in this paper, takes into account the interdependence between the natural capital and the wine industry and considers both risks and opportunities. The effects of changing environment on the wine company are tangible, so the issues can be best addressed by a strategic approach (Porter and Reinhardt 2007). As demonstrated in this study, the benefit of adopting the ecosystem services approach will lead to a more resilient wine industry that addresses the loss of biodiversity and declining natural resources and minimizes the impacts of climate change and other environmental issues (Table 2).

While our focus on this paper has been on the wine industry, this approach can also be applied to other agribusinesses who are seeking to direct organizational change through providing practices needed to improve social, environmental, and economic performance . This strategic approach offers potential to boost profits and create social good at regional scale (Sekine et al. 2010). It will also encourage business support for policies to protect and restore ecosystems. It can be further used to proactively develop strategies to identify and manage specific business risks and opportunities in value chains (Maloni and Brown 2006) arising from their company’s dependence and impact on ecosystems and in reducing ecological footprints (Wackernagel and Rees 1996).

Mechanisms and Policy Support for Managing Ecosystem Services

Identification and acknowledgment of the role of ecosystem services in managing land-based agribusiness organizations can lead to the development of markets for ecosystem services (Kumar 2005). For example, an agribusiness organization involved in processing and marketing of breakfast cereals can also evolve into managing other valuable ecosystem services on the farmers’ fields such as carbon credits, biodiversity credits, etc. (Narloch et al. 2011). Climate -induced risks to business organizations have prompted some of these organizations to identify and mitigate these risks through adoption of sustainable strategies (Bleda and Shackley 2008). At global scale, several studies have been conducted to understand the impacts of climate change and its socioeconomic consequences (Stern 2006; TEEB 2010). Markets have been created to mitigate the impacts of climate by reducing emissions, watershed restoration, biodiversity offsets, etc. (Waage and Stewart 2007). Some organizations are proactively forming partnerships (such as fair trade, rainforest alliance, roundtable for responsible soy, sustainable palm oil) for involving relevant stakeholders to manage natural landscapes and incorporating environment into daily operations. These initiatives are opening new streams of revenue for the businesses involved.

The wine company discussed in this study has adopted measures to respond to the risks identified by using ecosystem services approach (Table 2). This organization also explored opportunities identified for developing markets such as carbon credits by securing soil carbon through planting of native plants in and around the vineyards. Under the national carbon farming initiative, such efforts can result in opening of market for belowground and aboveground carbon maintained at their vineyards (CFI 2012).

Mechanisms such as market based instruments (MBIs; Whitten et al. 2003) and payments for environmental services (PES; Wunder 2005) that help to establish balance between the provision and consumption of ecosystem services have been developed around the world. While MBIs have already been in use for several decades especially in the context of environmental subsidies and taxes, PES is a relatively new concept which has originally emerged to denote a payment scheme. PES schemes such as water purification, biodiversity conservation, or carbon sequestration are increasingly becoming popular because of their perceived simplicity and cost-effectiveness (Pagiola and Platais 2007). As discussed in this case study, agribusinesses can use EBBRAT to help explore new markets from the identified opportunities as discussed in the case study (Table 2). To operationalize these tools, a greater effort is required to bring together the scientific knowhow through relevant policies, so that business can utilize them to ensure sustainability at both local and global level.

Increasingly, organizations, especially agribusinesses, are being pressurized into adopting more sustainable practices, by a wide range of stakeholders. It includes revealing their impacts and dependencies on natural, social, and human capital (Natural Capital Coalition 2016). This chapter explores ecosystem services approach to manage sustainability in a premium grape- and wine-producing company based in South Australia. Identifying environmental issues and risks helped this wine company to develop its response and adopt measures to improve sustainability through ecosystem services approach. The wine industry and other agribusiness organizations are increasingly being constrained by natural resources and climate risks. Therefore, there is high potential for the adoption of EBBRAT and similar tools to identify and minimize ecosystem-based risks and integrate ecosystem services into their management system to achieve long-term sustainability. This can help develop sustainable food systems .

Reflection Questions: Readers are invited to reflect on their experience of engaged sustainability transpired by the case study and in terms of the concept presented in the chapter.
  1. 1.

    In the case described in this chapter, a wine-producing organization identified its dependence on natural capital and ecosystem services. It demonstrated this concept on the production side (vineyards) of the wine operations. How can it improve its environmental sustainability through the entire value chain using the EBBRAT tool? List any limitations of the approach described in the above example.

     
  2. 2.

    Please comment on how sustainable agriculture and food systems can help improve environmental and public health. What are the opportunities to apply ecosystem services approach at national and global agriculture and food policy?

     
  3. 3.

    Multinational agribusiness companies have supply chains spanning many countries/regions across the globe and thus have high impact on the environment and natural resources. Explain how they can apply ecosystem services approach to manage their risks associated with the natural resources. Please discuss using examples.

     
  4. 4.

    Some global organizations recognize that to feed the growing population which is likely to be more than 9 billion by 2050 (and given that nearly 800 million people are currently malnourished), global agriculture should only focus on increasing per unit productivity. This is likely to intensify negative impacts on public and environmental health. Please comment whether this approach on productivity only is sufficient to achieve food security for all. Are their alternative approaches that can help reduce impact on natural resources and improve sustainable food production?

     
  5. 5.

    Consumer-driven sustainability is driving many organizations to modify their operations and become more socially responsible and sustainable. What is the role of consumers in driving local and global agriculture and food systems toward sustainability? Please discuss with examples.

     
Exercises in Practice: Based on the case study described above, two exercises are provided to illustrate how ecosystem-based approach can be applied to a dairy enterprise and wine business industry.
  1. 1.

    Identification of ecosystem-based risks of a dairy enterprise

     
  • Brief Description of a Business Organization

“Dairy enterprise” (a pseudonym) is a multinational organization based in Switzerland that processes and markets milk products across the globe. This organization has one unit based in India that sources milk from dairy farmers through its contract farming operations and pays fair prices, which are higher than the market prices. A part of its revenue is used for its social development program that focuses on developing women’s health, children’s education, and dairy farmers’ well-being in rural areas in India. Milk is generally procured from farms and processed in the local chilling plants and then transported to a milk-processing factory located near Delhi. Milk is then processed to produce various milk products (including milk powder, cheese, yogurt and milk drinks, etc.), which are sold in domestic and international market through its retail outlets.
  • Task

To identify ecosystem-based risks in the entire value chain of “dairy enterprise.”
  • Steps

Steps in the application of ecosystem-based approach (Fig. 4).
Fig. 4

Steps in the application of ecosystem-based approach

Aim: Use EBBRAT to identify ecosystem-based risks in the entire value chain of a dairy business (Fig. 5) following the “guide for using ecosystem-based approach” (Table 3 and Fig. 6).
  • Classification of ecosystem services

  1. 2.

    Assessing true cost of wine production

     
  • Brief description of the business organisation

Fig. 5

Value chain of a dairy business

Table 3

Classification and definition of four categories of ecosystem services and their types (Costanza et al. 1997; MEA 2005)

 

Ecosystem services

Types

Definitions

Examples

 

Regulating services: Ecosystems regulate essential ecological processes and life-support systems through biogeochemical cycles and other biospheric processes

1

 

Gas regulation

Regulation of atmospheric chemical composition

Examples: CO2/O2 balance, O2 for UVB, SOx levels

2

 

Climate regulation

Regulation of global temperature, precipitation, and other biologically mediated climatic processes at global or local levels

Example: Forests can impact regional rainfall levels

3

 

Disturbance regulation

Capacitance, damping, and integrity of ecosystem response to environmental fluctuations

Examples: Mangrove forests and coral reefs protect coastlines from storm surges; biological decomposition processes reduce potential fuel for wildfires

4

 

Water regulation

Influence ecosystems have on the timing and magnitude of water runoff, flooding, and aquifer recharge, particularly in terms of the water storage potential of the ecosystem or landscape

Examples: Permeable soil facilitates aquifer recharge; river floodplains and wetlands retain water – Which can decrease flooding during runoff peaks – Reducing the need for engineered flood control infrastructure

5

 

Water supply

Inland bodies of water, groundwater, rainwater, and surface waters for household, industrial, and agricultural uses

Examples: Freshwater for drinking, cleaning, cooling, industrial processes, electricity generation, or mode of transportation

6

 

Erosion control

Role vegetative cover plays in soil retention

Examples: Vegetation such as grass and trees prevents soil loss due to wind and rain; forests on slopes hold soil in place, thereby preventing landslides

 

Supporting services: these are the services that are required to support the production of other ecosystem services

7

 

Soil formation

Soil formation processes

Examples: Accumulation of organic material, weathering of rocks

8

 

Nutrient cycling

Storage, internal cycling, processing and acquisition of nutrients

Examples: Nitrogen fixation

9

 

Waste treatment

Recovery of mobile nutrients and removal or breakdown of excess or xenic nutrients and compounds

Examples: Waste treatment, pollution control detoxification

10

 

Pollination

Role ecosystems play in transferring pollen from male to female flower parts

Example: Bees from nearby forests pollinate crops

11

 

Biological control

Influence ecosystems have on the prevalence of crop and livestock pests and diseases

Example: Predators from nearby forests – Such as bats, toads, snakes – Consume crop pests

12

 

Habitat/Refugia

Habitat for resident and transient production

Examples: Nurseries, habitat for migratory species, regional habitats for locally harvested species

 

Provisioning services: These include food and services for human consumption, ranging from raw materials and fuel wood to the conservation of species and genetic material

13

 

Food production

That portion of gross primary production extractable as food

Examples: Production of fish, crops, nuts, fruits

14

 

Raw materials

That portion of gross primary production extractable as raw material

Examples: Production of lumber, fuel, or fodder

15

 

Genetic resources

Genes and genetic information used for animal breeding, plant improvement, and biotechnology

Example: Genes used to increase crop resistance

 

Cultural services: Cultural services contribute to the maintenance of human health and well-being by providing recreation, aesthetics, and education

16

 

Recreation

Recreational pleasure people derive from natural or cultivated ecosystems

Examples: Hiking, camping, bird watching, scuba diving, going on safari

17

 

Cultural

Providing opportunities for noncommercial uses

Examples: Aesthetic, artistic, education spiritual, and/or scientific values

Fig. 6

Guide for using ecosystem based approach in dairy enterprise

A wine-producing organization based in Napa Valley, California, owns 400 ha of vineyards producing both chardonnay and merlot wines. The wine-making facility is located near the vineyards. The company employs local workers for both vineyard and wine-making facilities. Vineyards are irrigated by tapping into underground aquifers through bore well. There is a 50-ha area dedicated to native bush planting close to the vineyards. The wines are about 30 years old and have native vegetation around each vineyard as a biodiversity corridor to attract natural enemies of pests and disease. These native plants also help to sequester some of carbon dioxide from the atmosphere.
  • Task

What are the social, human, and natural capital associated with wine production?

The current business accounting system only recognizes costs associated with inputs, labor, capital costs, etc. It does not account for any depletion of natural resources, greenhouse gas emissions, and associated environmental costs including damage to air, water and biodiversity, social inequities, loss of natural, social and human capital, and any impacts on health. To develop sustainable agriculture and food systems, there is need to recognize the role of social, human, and natural capital (see Table 4).
Table 4

Different types of social, human, and natural capitals (Costanza et al. 1997; Keeley 2007; UNU-IHDP and UNEP 2014)

Social capital

Market design, regulations, rules

Civil and criminal laws; judicial systems

Community rules, norms, customs, culture

Constitutions; judiciaries; law and order; tax systems

Social equity; communal harmony; cultural diversity

Societal interactions, relationships

Formal and informal institutions

Human capital

Health

Education

Skills and knowledge

Traditional community knowledge

Public databases

Non-patent knowledge, intellectual outputs

Motivation and capacity for relationships of the individual

Natural capital

Biodiversity, ecosystems

Agriculture fields, forests

Community forests, national parks

Grazing commons

Aim: Use EBBRAT to identify and value social, human, and natural capital in the entire value chain of wine business following the “guide for using ecosystem-based approach” (Fig. 7).
Fig. 7

Guide for using ecosystem based approach in the wine company

Lessons Learned to Develop Sustainable Food Systems and Their Implications for Business Organizations
  • Agriculture worldwide is under immense pressure to simultaneously increase production while minimizing impacts on environment and human health, which have begun to pose increasing risks to society.

  • Natural resource-dependent business organizations face high risks due to changes in the ecosystems and their services.

  • Organizations that source their raw material from nature such as agribusiness can play an important role to turn ecosystem-based risks into opportunities for the sustainability of business organization.

  • Revealing all negative and positive impacts on social, human, and natural capital in the entire value chain can help improve transparency for shareholders, investors, and consumers.

  • Utilizing ecosystem-based approaches can help conserve natural capital and protect environment while maintaining global supply chains for agribusiness companies.

  • Sustainable food and agriculture systems can help eradicate hunger and poverty by providing access to healthy and nutritious food, thereby contributing to the achievement of globally agreed sustainable development goals of the United Nations.

Reflection Questions

  1. 1.

    Sustainability paradigm is not limited to environment and nature, but there is a need to integrate social and human capital in holistic thinking. Reflect on your understanding about the role of social, human, and natural capital in a business organization.

     
  2. 2.

    What are the best ways to capture and communicate impacts and dependencies on natural, social, and human capital in business organizations?

     
  3. 3.

    How can business benefit from revealing their impacts on natural capital and ecosystem services?

     
  4. 4.

    What are the global frameworks that are developing knowledge bases to incorporate value of nature into business?

     
  5. 5.

    Business has a role to play for inclusive growth and development to achieve sustainable development goals (SDGs) as agreed by all member countries of the United Nations from 2016 to 2030. How can businesses best address this commitment?

     

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Copyright information

© Springer International Publishing AG 2018

Authors and Affiliations

  • Sukhbir Sandhu
    • 1
    Email author
  • Claudine Soosay
    • 1
  • Howard Harris
    • 1
  • Hans-Henrik Hvolby
    • 2
  • Harpinder Sandhu
    • 3
  1. 1.School of ManagementUniversity of South AustraliaAdelaideAustralia
  2. 2.Department of Materials & ProductionCentre for Logistics, Aalborg UniversityAalborgDenmark
  3. 3.College of Science and EngineeringFlinders UniversityAdelaideAustralia

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