Economic and financial assessment of the adoption of best management practices in Mediterranean citrus farming

Aim of study: To assess the financial and economic feasibility of adopting agricultural Best Management Practices (BMPs) in lemon farming, accounting for environmental externalities and comparing them with conventional and organic production systems. Area of study: Region of Murcia (SE Spain). Material and methods: The study applies a financial and economic investment evaluation framework to lemon farming systems. A financial analysis is conducted for the two production systems currently operating in the market—conventional and organic—using standard investment indicators such as Net Present Value, Internal Rate of Return, and Discounted Payback Period. In addition, an economic evaluation is performed to incorporate the environmental externalities generated by a BMP-based system through contingent valuation methods, which are not reflected in market prices. Main results: The financial analysis shows that organic lemon farming yields lower financial returns (NPV = €86,324; IRR = 6.22%) than the conventional system (NPV = €92,454; IRR = 6.53%). When the social demand for environmental externalities (valued at 0.96 €/kg) is integrated into the economic evaluation, the BMP-based system generates benefits that are 57.33% higher than those of the conventional system and 68.50% higher than those of the organic system. This underscores the necessity of incorporating the environmental externalities of BMPs into investment appraisals. Research highlights: Including environmental externalities in investment appraisal significantly improves the assessment of agricultural projects and supports the adoption of BMPs as a viable pathway towards sustainable agricultural transition.