The contribution of a sector to the aggregate or macro-economy is calculated by multiplying the quantity of goods with the market value or price of goods. However, as noted in the introduction, in the case of urban agriculture, official statistics are unlikely to be very accurate because much of the produce is not sold at markets and prices cannot be easily determined. Studies have either estimated total value, the volume of output, or the share of urban food needs produced by UPA. (See Table 9.1.) Although indicative, these estimates are not strictly comparable because they have been produced in different years, using different methodology, and look at different commodities (Nugent, 2000).
One calculation in urban areas of lower income countries found 40-70 per cent of the household budget is spent on food and fuel, with the poorest residents spending between 60-90 per cent of their budgets in this way (Nugent, 2000). This indicates that UPA will often make a significant contribution to a city’s aggregate demand or domestic product. There will also be a multiplier effect on urban economies generating output and income, both in related industries, such as tool manufacture, storage and processing, and in completely unrelated industries.
Where UPA and urban rural links are well developed, food prices are likely to be lower because of a reduction in inefficiencies and cost in the supply system, and because of a lower demand due to households substituting market-bought produce with home produced produce. A large number of smaller producers operating on a regional scale will also be expected to have lower food prices compared with a global oligopolies or monopolies.
Well-developed urban-rural links and UPA can be effective buffers to both domestic and external economic ‘shocks’ as illustrated in the examples of Cuba and Russia in the 1990s. These buffers improve the population’s food security and contribute to the resilience and sustainability of the city.
External economic benefits of UPA include cost savings to various sectors including waste management. The ability of UPA to recycle organic waste reduces the municipal authorities’ potential costs associated with waste disposal and landfill. Cost savings may accrue to municipal authorities and the private sector through the reduced need for storm water infrastructure and management. Soils will retain water for longer periods, especially when high in organic matter, whilst hard surfaces often result in a rapid run-off of rainwater into drains and catchment channels leading to a greater potential risk of flooding and flood damage. Improvements in air quality brought about by sustainable UPA activities may lead to improvements in the health of the population and to improved labour productivity, resulting in cost savings accruing to individuals, Government health departments and companies.
The external economic costs of some UPA activities can include factors such as pollution abatement and remediation where chemical inputs are used. The cost to the water utilities of cleaning water contaminated with pesticides and other biocides can be substantial. External costs of UPA can also include the costs associated with transport related activities (vehicle emissions/pollution) although these will be significantly lower than those associated with imported produce and air freighted food (Jones, 2001). The internalisation in the market of the external costs and benefits associated with UPA would give sustainable urban and periurban produce an additional comparative advantage in markets over similar produce from further afield or from unsustainable production systems.