Bridging environmental and financial cost of dairy production: A case study of Irish agricultural policy.

The Irish agricultural policy 'Food Harvest 2020' is a roadmap for sectoral expansion and Irish dairy farming is expected to intensify, which could influence the environmental and economic performance of Irish milk production. Evaluating the total environmental impacts and the real cost of Irish milk production is a key step towards understanding the possibility of sustainable production. This paper addresses two main issues: aggregation of environmental impacts of Irish milk production by monetization, to understand the real cost of Irish milk production, including the environmental costs; and the effect of the agricultural policy 'Food Harvest 2020' on total cost (combining financial cost and environmental cost) of Irish milk production. This study used 2013 Irish dairy farming as a baseline, and defined 'bottom', 'target' and 'optimum' scenarios, according to the change of elementary inputs required to meet agricultural policy ambitions. The study demonstrated that the three monetization methods, Stepwise 2006, Eco-cost 2012 and EPS 2000, could be used for aggregating different environmental impacts into monetary unit, and to provide an insight for evaluating policy related to total environmental performance. The results showed that the total environmental cost of Irish milk production could be greater than the financial cost (up to €0.53/kg energy corrected milk). The dairy expansion policy with improved herbage utilization and fertilizer application could reduce financial cost and minimize the total environmental cost of per unit milk produced.