Agroforestry Chapter 6 (Part 2): Evaluation, Economics and Agroforestry Around the World
Agroforestry Notes · Chapter 6 · Part 2
Chapter 6 (Part 2): Evaluation, Economics and World Systems
LER with a worked example, RYT, IER and harvest index; NPV, IRR, B/C ratio, discounting and opportunity cost; and agroforestry in tropical and temperate regions (mainly from Nair).
1. Biological evaluation
LER (land equivalent ratio) (Nair)The ratio of the area needed under monoculture to a unit area of intercropping to give an equal amount of yield, (see Chapter 24)Source: Nair (1993), Glossary
Harvest index (Nair)The proportion of assimilate distribution between economic and total biomass. (see Chapter 24)Source: Nair (1993), Glossary
LER was first proposed at IRRI (1974, 1975). It is the sum of the relative yields of the components. For agroforestry, Rao and Coe (1992) wrote it as:
LER = Ci/Cs + Ti/Ts (C = crop, T = tree; i = intercrop, s = sole)
Worked example: maize gives 3.2 t/ha in the alley system and 4.0 t/ha alone; Leucaena gives 4 t/ha fodder in the system and 10 t/ha alone. LER = 3.2/4.0 + 4/10 = 0.8 + 0.4 = 1.2. So 1.2 ha of sole crops would be needed to equal 1 ha of the mixture, a 20% land advantage.
| LER value | Meaning |
|---|---|
| = 1 | No advantage of mixing |
| < 1 | Mixture is worse than sole crops |
| > 1 | Advantage of mixing (complementarity) |
- LER at uniform overall density equals the relative yield total (RYT).
- Income Equivalent Ratio (IER) uses income instead of yield.
- Limits: LER is usually one season’s figure, so it does not reflect sustainability; it is not relevant for time-based (interpolated) systems; tree and crop yields come in different units and seasons.
- Agroforestry systems are evaluated on productivity, sustainability and adoptability.
2. Economic evaluation
Benefit/cost analysis (developed in the 1930s) compares the stream of costs and benefits over the life of a project. Because trees give returns many years later, future money must be discounted to present value.
Net present value (NPV) (Nair)An indicator of a project's long-term value as estimated at the time of implementation; it is calculated by summing all the annual net costs or benefits over the prescribed life span of a project, discounted at a preselected rate.Source: Nair (1993), Glossary
Internal rate of return (IRR) (Nair)The maximum rate of interest that a project can repay on loans while still recovering all investment and opportunity costs; or, the earning power of money invested in a particular venture.Source: Nair (1993), Glossary
Discounting (Nair)The process of determining the present worth of a future quantity of money.Source: Nair (1993), Glossary
Opportunity cost (Nair)The true sacrifice incurred by the choice of a given action.Source: Nair (1993), Glossary
NPV = Σ (Bt − Ct) / (1 + r)t B/C = Σ Bt/(1 + r)t ÷ Σ Ct/(1 + r)t IRR = r at which NPV = 0
| Criterion | Accept if | Strength | Weakness |
|---|---|---|---|
| NPV | > 0 | Shows absolute net gain | Says little about the scale of capital needed |
| B/C ratio | > 1 | Compares projects of different sizes | Needs a pre-selected discount rate |
| IRR | > cost of capital | No discount rate needed in advance | Can mislead when cash flows change sign |
- Ex-ante analysis is done before a project starts; ex-post after it is implemented.
- Shadow prices are used when market prices do not show the true social value of inputs or outputs (e.g. family labour, fuelwood collected free).
- Thailand (Wannawong et al., 1991): Eucalyptus + cassava gave the highest NPV, 41% above the best monocrop (cassava).
Exam point: Exam trap: IRR is the discount rate at which NPV becomes zero. NPV > 0 and B/C > 1 always go together.
3. Agroforestry around the world
| Ecological zone | Share of tropics (approx.) | Typical systems |
|---|---|---|
| Humid and sub-humid lowlands | 35% | Homegardens, plantation-crop combinations, multilayer tree gardens, alley cropping, taungya |
| Semi-arid and arid lands | 45% | Silvopasture, windbreaks and shelterbelts, parklands (Faidherbia, shea, Parkia), fuelwood trees |
| Tropical highlands | 20% | Soil conservation hedges, Chagga gardens (Kilimanjaro), coffee and tea under shade |
Temperature falls about 0.6 °C per 100 m rise in altitude, which is why highlands form a separate zone.
Dehesa (Spain, Portugal)
Open oak woodland (cork and holm oak) grazed by pigs, sheep and cattle; also called montado in Portugal.
Paulownia and poplar (China)
Paulownia intercropped with wheat and other crops on the North China plain; poplar intercropping too.
Pine-pasture (southern USA)
Double rows of pine (e.g. 1.2 × 2.4 m) with 12.2 m alleys of grazed pasture.
Pinus radiata and sheep (New Zealand)
Widely spaced radiata pine on grazed pasture; a well-known temperate silvopasture.
Walnut and pecan alleys (USA)
High-value nut trees with crops in the alleys.
Shamba (Kenya)
East African form of taungya.
4. Harvest index, sustainability and adoptability (Nair, Chapter 24)
Nair argues that harvest index has little use in agroforestry: it counts only above-ground dry matter, ignores the economic value of the product, covers one season while trees are harvested years later, and says nothing about sustainability. His table shows why dry-matter share means little for tree crops:
| Crop | Value (US$/t) | Harvest index |
|---|---|---|
| Rice | 195 | 0.12–0.52 |
| Maize | 95 | 0.22–0.35 |
| Cassava | 20 | 0.42–0.60 |
| Rubber | 1,000 | 0.013 |
| Coffee | 2,200 | 0.012 |
| Cacao | 2,000 | 0.003–0.025 |
| Tea | 500 | 0.014–0.048 |
Sustainable development (Brundtland Report, quoted by Nair)development that meets the needs of the present without compromising the ability of future generations to meet their own needsSource: WCED (1987), in Nair (1993), An Introduction to Agroforestry, Chapter 24
Sustainable agriculture (TAC of CGIAR, quoted by Nair)should involve the successful management of resources for agriculture to satisfy changing human needs while maintaining or enhancing the quality of the environment and conserving natural resourcesSource: CIMMYT (1989), in Nair (1993), An Introduction to Agroforestry, Chapter 24
- In production terms, sustainability is maintenance of production over time without degrading the natural resource base. Three issues: change in productivity over time, the time-frame, and the costs of maintaining production.
- Many workers say sustainability is “understood intuitively” (Bellows, 1992). There is no quantitative measure yet; total factor productivity (TFP) over time has been proposed.
- Adoptability: Muller and Scherr (1990) reviewed monitoring and evaluation in 165 projects and suggested three steps: farmer evaluation, field evaluation and field testing.
- Tabora (1991) used Conway’s Agroecosystem Analysis in the Philippines with five criteria: social relevance, profitability, balance, versatility and creativity, longevity and reliability. Such methods were found too subjective.
Nair and Dagar (1991): a weighted scoring method
Choose a representative system; describe its components, arrangement and interactions
↓
List its functions: production and service (e.g. soil conservation)
↓
Measure productivity (kg/ha/yr) and its change over about 5 years; note LER
↓
Add soil data, economic value (market price or NPV) and social values (scores 1–5 or 1–10)
↓
Give each factor a weight totalling 100, e.g. biological 30, soil 25, economic 25, social 20
↓
Split each weight among sub-factors, e.g. grain 50% of 30 = 15%, fodder 9%, wood 6%
↓
Score a second system the same way and compare the percentage indices; repeat with other weights
Exam point: Ranking with weights shows which product or service a system is best at, and where research should focus. ICRAF’s AFRENA networks (Agroforestry Research Networks for Africa) were suggested as the place to test it.
5. Economics in more depth (Nair, Chapter 22)
Chapter 22 of Nair was contributed by Mark B. Follis, Jr. (University of Florida). The terms below are from its Table 22.2.
Ex-ante analysisThe evaluation of the merits of a proposed project before implementation.Source: Nair (1993), An Introduction to Agroforestry, Table 22.2
Ex-post analysisThe evaluation a completed project.Source: Nair (1993), An Introduction to Agroforestry, Table 22.2
On-going analysisAn evaluation of an existing enterprise.Source: Nair (1993), An Introduction to Agroforestry, Table 22.2
ExternalityResult of an activity that causes incidental costs or benefits to a second party with no corresponding compensation or payment from or to the generating party.Source: Nair (1993), An Introduction to Agroforestry, Table 22.2
Real rate of interestThe prevailing rate of interest minus the inflation rate (may be positive or negative).Source: Nair (1993), An Introduction to Agroforestry, Table 22.2
Shadow priceA price used in economic analysis when markets prices do not reflect actual costs to society.Source: Nair (1993), An Introduction to Agroforestry, Table 22.2
| Benefits of agroforestry (Arnold, 1987) | Costs and constraints |
|---|---|
| Keeps or raises site productivity at low cost | Less staple food where trees compete with crops |
| More value of output per unit of land | Trees clash with free grazing, burning and common fields |
| Diverse outputs: self-sufficiency and less risk | Trees hinder mechanization |
| Spreads labour more evenly over the year | Labour clash where the planting season is short |
| Uses idle land, labour or capital; trees are capital stock for emergencies | Long wait for returns; insecure tenure adds risk |
Financial vs economic analysis
Financial analysis looks from the private farmer’s view (prices actually paid). Economic analysis looks from society’s view: it adds subsidies and uses shadow prices. Example: Akachuku (1985) found Gmelina arborea with maize and yam in Nigeria very profitable, but only because seedlings, family labour and land were all costed at zero. An economic analysis would value family labour and land at their opportunity cost and add the cost of seedlings.
- A “with and without” comparison suits agroforestry: it shows the decline that would occur without the trees and brings out environmental benefits.
- Why discount: money can earn a real interest elsewhere (opportunity cost), a rupee matters more to a poor person (marginal utility), and people prefer present to future consumption (positive rate of time preference).
- A higher discount rate favours projects with early benefits and late costs, and undervalues long-term environmental benefits. Public projects may use a lower social discount rate.
Present value = Xt / (1 + i)t. At 10%, ₹1,000 today grows to ₹1,610 in 5 years; so ₹1,610 due in 5 years is worth ₹1,000 today (Gregory, 1987).
| Nam Pong reservoir, Thailand (million baht) | Undiscounted | At 6% | At 10% |
|---|---|---|---|
| Benefit in year 1 | 298 | 282 | 271 |
| Benefit in year 50 | 239 | 13 | 2 |
| Total over 50 years | 13,517 | 4,431 | 2,837 |
A difference of only 4 points in the discount rate changed total benefits by over a third (Dixon and Hufschmidt, 1986).
B/C ratio and IRR in practice
Benefits 1.5 million, costs 1.0 million, extra associated costs 0.4 million: as a cost → 1.5/1.4 = 1.07; as a negative benefit → 1.1/1.0 = 1.10
- So the B/C ratio depends on how costs are classified (Gregory, 1987). When NPV and B/C ratio disagree, NPV is preferred (Gittinger, 1982).
- A project is acceptable if its IRR exceeds the opportunity cost of capital: at 8% interest, a 10% IRR passes and a 5% IRR fails. IRR needs no discount rate in advance, but is not strictly valid when cost–benefit patterns change sharply, as in agroforestry.
- Ahmed (1989), India: Eucalyptus tereticornis on field bunds, IRR 46.6% for an 8-year rotation, 37.9% for 9 years and 30.9% for 10 years, so 8 years was best.
- Saxena, north-west India: eucalyptus on bunds lowered crop yields in a strip 2–10 m wide; counting this loss cut the B/C ratio (15% discount) from 9.2 to about 2.
| System (Phu Wiang, Thailand, 8%) | NPV (baht/rai) | B/C |
|---|---|---|
| Cassava alone | 2,807 | 2.7 |
| Mungbean alone | 604 | 1.4 |
| Eucalyptus alone | 151 | 1.2 |
| Acacia auriculiformis alone | −164 | 0.9 |
| Eucalyptus + cassava | 3,968 | 2.5 |
- 1 ha = 6 rai. Cassava alone has the higher B/C ratio but eucalyptus + cassava has the higher NPV, so NPV decides.
- Sensitivity analysis re-calculates the result with changed prices or discount rates. Dunn et al. (1990), Alnus acuminata fuelwood in Ecuador: profitable at all four prices at 10%, never at 25%.
- Production function: Y = g(K, L, R0), where K = capital, L = labour, R0 = natural resources (land). Labour is about 80–85% of all resources used in traditional farming (Stevens and Jabara, 1988).
- Alley cropping at IITA needed about 50% more labour, offset by up to 60% more maize and less fertiliser (Ngambeki, 1985). Using prunings as feed pays only when the crop responds little to mulch (Jabbar and Cobbina, 1992).
6. Social and policy aspects (Nair, Chapter 23)
Because agroforestry aims at small, resource-poor farmers, social acceptability matters more than for high-input agriculture. It has even been called a “very social science” (Pawlick, 1989). Burch and Parker (1991) argue that the green revolution is not a good model for agroforestry.
| Burch (1991): five kinds of social study | What they examine |
|---|---|
| Assessment studies | Social benefits and costs at government, project and village levels |
| Tenure studies | How tenure affects the success of agroforestry |
| Institutional studies | Social institutions and their effect on projects |
| Community studies | How communities respond to innovations |
| Adoption studies | What makes farmers adopt new technology |
Land tenure and tree tenure
- Farmers plant trees on securely held land and short-term crops on insecure plots (Costa Rica, Haiti). Some African customary rules even forbid tree planting.
- Tree tenure can differ from land tenure (Fortmann, 1987). It covers the rights to own or inherit trees, to plant, to use trees and their products, to exclude others, and to dispose of products.
- Where planting a tree gives a claim to the land (Lesotho, parts of Nigeria), tenants with temporary rights are not allowed to plant trees.
- Communal land and seasonal redistribution held back alley farming in south-east Nigeria.
Experts vs farmers
Dove (1992), Pakistan
- Study of the Forestry Planning and Development Project, Pakistan’s first nationwide social forestry project
- Foresters thought farmers opposed trees; most farmers already had trees and wanted more
- Foresters expected demand for market exotics in blocks; farmers wanted a few native multipurpose trees for fuel and timber at home
- Farmers said more fuelwood would mean less dung burnt
Campbell, Haiti (120 farms)
- Agroforestry Outreach Project (USAID; Pan American Development Foundation, 1981–1991)
- Fruit trees (mango, avocado) preferred to wood trees; 42% of fruit trees came from sown seed
- 54% of wood trees were volunteer seedlings left to grow; only about 15% came from the project nursery
- Evaluations counted only project trees and missed farmers’ own trees
- Osemebo (1987), 300 farmers in Bendel State, Nigeria, would plant trees if: seedlings were free, trees did not lower crop yields, and the trees gave some income.
- Forest-based small enterprises are among the top three rural employers in several countries (FAO, 1987). Tree products are often treated as “free goods”.
- Raintree and Warner (1986) drew pathways of land-use intensification from shifting cultivation to multistorey systems; labour intensity is a key factor.
- Policy research themes (IFPRI workshop, Washington, 1991): macroeconomics, land and tree tenure, organizational reform, institutional support and infrastructure, and markets, subsidies and incentives.
- Adoption: in south-west Nigeria alley farmers rose from about 60 (1987) to over 200 (1989), but in south-east Nigeria acceptance was poor because of acid, infertile soils, rotations, household labour division and tenure (Francis and Atta-Krah, 1989).
7. Temperate-zone agroforestry in detail (Nair, Chapter 25)
Chapter 25 was contributed by Alan J. Long (University of Florida). The temperate zone here lies mainly between latitudes 30° and 60°. The three main systems are windbreaks and shelterbelts, silvopasture and nut or fruit trees with crops. Temperate agroforestry is opportunistic (for profit, often mechanized), while tropical agroforestry is a matter of subsistence.
Biblical olive and fig culture; livestock in Roman olive and orange groves
↓
Dehesa of Spain, possibly from the Roman occupation
↓
Han Dynasty China (206 BC–220 AD): forest, livestock and crops planned together
↓
Chimin Yaoshu (6th century AD): Sophora japonica seedlings raised with hemp
↓
Nongzheng Quanshu (1640): soybean between rows of Chinese chestnut; shade trees in tea
↓
Pigs grazed in English forests (early 1600s); timber as the main aim only about 200 years old
↓
Mid-1800s: shelterbelts planted on the plains of North America and Europe
Nut trees with crops
- J. Russell Smith, Tree Crops: A Permanent Agriculture (1950), argued from 1914 for nut trees, oaks, persimmon and honeylocust. The Tennessee Valley Authority took this up after the 1930s Depression.
- Black walnut (Juglans nigra), Missouri: about 3 × 12 m spacing; wheat, milo and soybean for the first 10–12 years, then forage and cattle. Nuts from 10–15 years, peak at 25–30, timber harvest at 60–80 years. Nut shells are used as abrasives.
- Pecan in Kansas, Oklahoma and Missouri: a low-input system of cleared bottomland with grazed ground cover.
- Poplar: intercropped for 3–6 years in Europe and Canada; with wheat and other crops in China, together with Paulownia tomentosa. Poplar intercropping in northern Italy is declining.
- About 10% of orchards in Washington State are intercropped with vegetables and 25% are grazed.
| Black walnut regime (Kurtz et al., 1984) | PNW at 7.5% ($/ha), site index 65 | IRR |
|---|---|---|
| Timber only | −2,937 | 4.3% |
| Timber + nuts | −1,370 | 5.9% |
| Timber + nuts + wheat | 160 | 7.8% |
| Timber + nuts + wheat + soybean + fescue hay + grazing | 640 | 8.7% |
The more intensive the mixture, the higher the return. Site index here is tree height (m) at age 50.
Silvopasture
- South-eastern USA: “pine-and-pasture” or “cattle-under-pine” with slash pine (Pinus elliottii) and longleaf pine (P. palustris). Pensacola bahiagrass (Paspalum notatum) is the most shade-tolerant forage.
- Standard planting is about 1,110 trees/ha at 2.4 × 3.7 m. The best arrangement for both forage and wood was double rows (1.2 × 2.4) × 12.2 m (Lewis and Pearson, 1987). Normal stands shade out forage in 5–15 years.
- New Zealand: interest grew in the late 1960s (drought of 1968); radiata pine is the main species, in three types: forest grazing, timberbelts and trees on pasture. In Western Australia radiata pine at 100 trees/ha is pruned to 6 m; on pasture it lowered the water table by 1.5 m in 10 years.
- Dehesa (Spain) and montado (Portugal): about 5.5 Mha of Quercus rotundifolia, Q. suber and Q. faginea at 5–20% cover (50–100 trees/ha), grazed mainly by sheep (Merino). It has declined since the 1950s.
- Small MPT plantings in temperate countries favour black locust (Robinia pseudoacacia) and alders (Alnus): N-fixing, fast, easy from seed, and they coppice.
- Western Himalaya (India): fodder trees Albizia chinensis (ohi), Bauhinia variegata (kachnar), Celtis australis (khirik), Ficus roxburghii (timla), Grewia optiva (bhimal), Morus serrata (kimu).
The three tropical zones in more detail (Nair, Chapter 4)
| Zone | Climate (Köppen) | Main soils |
|---|---|---|
| Humid lowlands (>1,000 mm) | Af, Am, Aw | Ultisols (Acrisols), Oxisols (Ferralsols) |
| Dry lowlands (savanna, Sahel, cerrado) | Aw, Aw′, B | Alfisols, Vertisols, Entisols |
| Highlands (>1,000 m) | Ca, Cw; growing season over 120 days | Andosols and others |
Nair’s examples: alley cropping at Nyabisindu (Rwanda highlands), gum gardens of Acacia senegal in Sudan, the corridor system of Zaire, Paraiso (Melia azedarach) woodlots in Paraguay and Casuarina oligodon fallows in the Papua New Guinea highlands.
8. Quick revision box
- LER first at IRRI (1974–75); AF form by Rao and Coe (1992): Ci/Cs + Ti/Ts.
- Example 0.8 + 0.4 = 1.2 → 20% land advantage.
- LER = RYT at uniform density; IER uses income; LER misses sustainability.
- NPV > 0; B/C > 1; IRR = rate at which NPV = 0.
- B/C compares projects of different sizes.
- Wannawong (1991): Eucalyptus + cassava best NPV (+41%).
- Tropics: humid 35%, dry 45%, highlands 20%; 0.6 °C per 100 m.
- Dehesa = Spain/Portugal; Paulownia = China; P. radiata + sheep = New Zealand.
- HI is of little use in AF: coffee 0.012, rubber 0.013 despite high value.
- Brundtland (WCED 1987) and TAC-CGIAR definitions; no quantitative measure; TFP proposed.
- Nair and Dagar (1991): weighted scoring, e.g. 30/25/25/20. Muller and Scherr reviewed 165 projects.
- Financial = farmer’s view; economic = society’s view with shadow prices. NPV preferred over B/C when they disagree.
- Ahmed (1989): eucalyptus on bunds IRR 46.6% at 8 years. Nam Pong: 13,517 → 4,431 (6%) → 2,837 (10%).
- Tree tenure: own, plant, use, exclude, dispose. Dove (Pakistan), Campbell (Haiti), Osemebo (3 conditions).
- Temperate: 30–60°; J. Russell Smith 1950; black walnut 3 × 12 m; pine-and-pasture double rows (1.2 × 2.4) × 12.2 m; dehesa 5.5 Mha.
9. Interactive MCQ Quiz
29 questions. Tap an option to see the answer and explanation, then go to the next question.
Comments
Post a Comment