Economics. Whether organic agriculture can continue to expand globally will primarily be determined by its financial performance compared with conventional agriculture. The main factors that determine the profitability of organic agriculture include crop yields , labour and total costs, price premiums for organic products, the potential for reduced income during the organic transition period (usually three years), and potential cost savings from the reduced reliance on non-renewable resources and purchased inputs.To the best of our knowledge, only one meta-analysis has analysedthe financial performance of organic and conventional agriculture.The analysis combines findings from 40 years of studies covering 55 crops grown on five continents. When actual price premiums (higher prices awarded to organic foods) were included,organic agriculture proved significantly more profitable (22 to 35%greater net present values) and had higher benefit/cost ratios (20 to 24%) than conventional agriculture. When organic premiums were taken away, net present values (−27 to −23%) — net returns accounting for the time value of money — and benefit/cost ratios (−8 to −7%) of organic agriculture were significantly lower than conventional agriculture. Although price premiums were 29 to 32%, breakeven premiums necessary for organic profits to match conventional profits were only 5 to 7%, even with organic yields being 10 to 18% lower. The size of organic premiums awarded, and the difference between organic premiums and breakeven premiums, were consistent during the 40-year study period. The fact that organic premiums were significantly higher than breakeven premiums suggests that organic agriculture can continue to expand even if premiums decline. The study also found that total costs were not significantly different, but labour costs were significantly (7 to 13%) higher with organic farming practices. Although one of the successes of conventional agriculture has been its ability to produce more with less labour, some have found the extra labour of organic agriculture to be beneficial in providing rural employment and development opportunities. Few economic studies have accounted for negative externalities(such as environmental costs) or positive externalities (such as ecosystem services), with associated monetary values, in organic and conventional comparison studies. Putting a price on the negative externalities caused by farming, such as soil erosion or nitrate leaching into groundwater, would make organic agriculture even more profitable, given that its environmental impact is less than that of conventional agriculture . Indeed, it has been estimated that a switch to organic production would lower the external costs of agricultural production in the United Kingdom by 75%, from £1,514 million yr–1 to £385 million yr–1 (ref. 64). A number of studies (for example, refs 65,66) have compared ecosystem services in organic and conventional farming systems. A few of these studies have accounted for the monetary value of ecosystem services; these studies generally show that conventional practices decrease the ability of farms to provide some economically significant ecosystem services relative to organic practices. For example, in a study comparing 14 organic arable fields with 15 conventional ones in New Zealand, the total economic value of three ecosystem services (biological pest control, soil formation and the mineralization of plant nutrients) in the organic fields was significantly greater at US$232 ha−1 yr−1 compared with the conventional fields at US$146 ha−1 yr−1. Factoring in such differences in economic comparison studies would probably make up for price premiums awarded to organic products. Price premiums and European subsidies for organic farms are often justified on the grounds that they compensate farmers for providing ecosystem services or avoiding damage to the environment.