Agriculture relies heavily on anthropogenic inputs, but reducing their use is critical to reduce the negative impact on ecosystems, on which production ultimately depends. At the same time, reducing inputs is often viewed as risky and potentially costly for farmers, which implicitly assumes that inputs are already being used in optimal way. However, conventional estimations of allocative efficiency – optimal use of inputs - are subject to several biases, which obscures the understanding of what is an optimal input allocation. In this short communication, we highlight what we consider a critical but often overlooked bias: the failure to account for nature-based alternatives to human-made inputs. We explore this issue through microeconomic theory and econometrics, and highlight that accounting for nature-based solutions may lead to a reconsideration of how the efficiency of certain anthropogenic inputs is understood. We illustrate this using a bioeconomic model of oilseed rape production, where farmers can manage pests either through chemical inputs or nature-based solutions, such as grassland re-implementation to enhance natural pest control. Our results show that both the productivity and allocative efficiency of insecticides are overestimated when the potential for farmers to rely on nature-based solutions is excluded from the analysis. This study contributes by showing that neglecting ecosystem services as a viable and competitive alternative to human-made production inputs generates a deadweight loss for society. Rather than focusing solely on negative externalities—as is often the case—our approach shifts the perspective towards identifying what constitutes the economically efficient way to manage agricultural systems.
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