The production function and profit function presented previously in this chapter make no explicit mention of resource, environmental, and social dimensions of sustainability. The profit maximization model implies reward for efficient use of resources. Similarly, rewards for efficient use of inputs provide disincentive for waste and related environmental emis­sions. The expected profit maximization and variance minimization model makes explicit the trade-offs between input use, expected profit, and variance of profit. Input use and implied waste may be increased or decreased to affect variability of profit. Various terms can be added to the expected profit maximization model to explicitly incorporate sustain­ability conditions and incentives. Explicit restrictions can be placed on the crop production function to limit the amount of nutrient loss to surface and groundwater. Such constraints raise the cost of production if they are binding. Emissions restrictions may represent regu­latory limits or sustainability conditions imposed by the processor or the farmer. Incentive payments can be added to the income portion of the function reflecting payments received for attaining sustainability criteria. Such terms could represent income from a watershed nutrient trading program or from credits from a carbon capture and retention program.

Outside of the expected profit maximization model, footprint and life cycle analysis based measures of performance can be included in contracts and farmers along with the processor and input providers can apply existing standards for sustainable production to set practices and procedures. Third-party certifying agencies can be employed to audit procedures, monitor progress, and suggest avenues for improvement. Such efforts can inform ongoing technology development efforts within the system.

Markets for traditionally non-market goods and services include markets for nutrient discharge permits or reduction credits, markets for carbon emission reduction credits, markets for renewable energy credits, and others. In addition, some manufacturers may sell branded or certified sustainable products at a premium to capture consumers’ willingness to pay for sustainability attributes. Some corporate retailers impose sustainability criteria on their suppliers and incorporate the increased cost of procurement into their product pricing. Such retailers may differentiate their products by highlighting the sustainability criteria in advertising campaigns.