Economic Analyses of Agroforestry Systems on Private Lands in Argentina and the USA

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Title: Economic Analyses of Agroforestry Systems on Private Lands in Argentina and the USA
Author: Frey, Gregory Eric
Advisors: Ben A. Bergmann, Committee Member
Mitchell A. Renkow, Committee Member
D. Evan Mercer, Committee Member
Robert C. Abt, Committee Member
Frederick W. Cubbage, Committee Chair
Abstract: Agroforestry in sub-tropical and temperate regions of the world has often been advocated as an environmentally-friendly class of land-use systems. However, private landowners are unlikely to adopt them to a great extent if they do not provide economic benefits. This dissertation analyzes some agroforestry systems in extra-tropical regions to see if they are a potentially beneficial use of land for private landowners. The first main section of this dissertation contains ex-post analyses of a single specific agroforestry system (silvopasture) in Northeastern Argentina. The second main section contains ex-ante analyses of several agroforestry and forestry systems in the Lower Mississippi Alluvial Valley, USA. Both sections investigate the private costs and benefits of agroforestry systems compared to conventional systems such as agriculture and forestry. The first chapter of the first section considers farmers’ subjective perceptions of the advantages and disadvantages of silvopasture systems in Argentina. Ordinal probit statistical models are used to determine the factors that explain their perceptions, and a binary logit model is used to determine how those perceptions might affect disadoption of the system. Most adopters have a positive view of the system and indicate that they will likely continue in the future. Small and medium farmers tend to have a more positive view of the cash flow and risk characteristics of silvopasture, while annual crop farmers and have a more negative view of cash flow and less educated farmers had a more negative view of its risk. While we did not gain a good understanding of the factors that influence farmers’ perceptions of costs and returns of silvopasture, those two perceptions were the most important factors in determining the likelihood of continuance. The second chapter investigates whether silvopasture is a more efficient use of resources for farmers than conventional systems such as pasture and plantation forestry in Argentina. A non-parametric technique based on linear programming called data envelopment analysis is used to estimate the relative technical efficiencies of the different systems. Then, non-parametric statistics are used to compare the systems within farms. Silvopasture is found to be a more efficient use of resources than conventional cattle ranching, but results were inconclusive with regards to conventional forestry. The first chapter of the second section compares the profitability and feasibility numerous agroforestry and production forestry systems to agriculture in the Lower Mississppi Alluvial Valley. The feasibility of these systems for potential in the future is assessed. A panel of experts helps define the most appropriate systems and delineate market conditions in the LMAV. A deterministic model of profits is used to identify the most profitable systems and expert opinion is used to assess other factors not directly tied to profitability. Some agroforestry and production forestry systems are shown to have potential for adoption on the most marginal land, but cannot compete with agriculture on average land unless incentives are paid to landowners. The final chapter uses stochastic models to compare those same systems in the LMAV. These stochastic models use measures of the variability of returns to different systems to understand how farmers’ decisions may be affected. A mean-variance model is employed to understand whether risk aversion might drive farmers to diversify their farms to produce agroforestry outputs. A real options model utilizes measures of variability and the costs of switching between agriculture and forestry or agroforestry to estimate how farmers might value flexibility. Diversification into forestry or agroforestry may help reduce the risk inherent in agriculture. However, the real options analysis shows that farmers are unlikely to adopt either forestry or agroforestry systems on anything but the most marginal land.
Date: 2009-07-16
Degree: PhD
Discipline: Forestry

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