Agricultural Economics Department


Date of this Version

June 2002


Published in Cornhusker Economics, 06/12/2002. Produced by the Cooperative Extension, Institute of Agriculture and Natural Resources, Department of Agricultural Economics, University of Nebraska–Lincoln.


Agricultural production results in a large number of joint products. Many are obvious: wheat and straw, corn and stalk grazing, etc. Many are somewhat less obvious: agricultural production results in open, usually attractive rural landscapes; agricultural income maintains local communities and provides rural employment; it maintains cultural values; and it provides food security. These are among the benefits often cited as spillover effects of agricultural production which are valued by society above and beyond the monetary value of the agricultural products themselves. Many have also noted that agricultural production frequently has negative spillover effects also. Among those cited are ground and surface water pollution resulting from cultivation, erosion, fertilizer and chemical use; livestock odor, dust, runoff and insects associated with feedlots and other concentrations of animals; and increased flooding caused by drainage and channelization of waterways. The recognition of the generally positive externalities or spillover effects are commonly referred to as “multifunctionality.” It is argued by some that agriculture must be supported to assure the production of the spillover effects in addition to the direct value of what is produced.