Environmental changes in biodiversity hotspot ecosystems of
South Ecuador: RESPonse and feedback effECTs (FOR2730)

Abstract:

Reducing global forest losses is essential to mitigate climate change and its associated social costs. Multiple market and non-market factors can enhance or reduce forest loss. Here, to understand the role of non-market factors (for example, policies, climate anomalies or conflicts), we can compare observed trends to a reference (expected) scenario that excludes non-market factors. We define an expected scenario by simulating land-use decisions solely driven by market prices, productivities and presumably plausible decision-making. The land-use allocation model considers economic profits and uncertainties as incentives for forest conversion. We compare reference forest losses in Brazil, the Democratic Republic of Congo and Indonesia (2000–2019) with observed forest losses and assign differences from non-market factors. Our results suggest that non-market factors temporarily lead to lower-than-expected forest losses summing to 11.1 million hectares, but also to phases with higher-than-expected forest losses of 11.3 million hectares. Phases with lower-than-expected forest losses occurred earlier than those with higher-than-expected forest losses. The damages avoided by delaying emissions that would otherwise have occurred represent a social value of US$61.6 billion (as of the year 2000). This result shows the economic importance of forest conservation efforts in the tropics, even if reduced forest loss might be temporary and reverse over time.

Abstract:

Few land-allocation models consider the impact of off-farm income on tropical deforestation. We provide a concept to integrate off-farm income in a mechanistic multiple-objective land-allocation model, while distinguishing between farms with and without re-allocation of on-farm labor to obtain off-farm income. On farms with re-allocation of labor we found that off-farm income reduced farmers’ financial dependency on deforestation- related agricultural income leading to less tropical deforestation. The influence of off-farm income covered two aspects: availability of additional income and re-allocation of on-farm labor to off-farm activities. The labor effect tended to reduce deforestation slightly more than the income effect. On farms without re-allocation of on-farm labor we showed how farmers can use off-farm income to purchase additional labor to accelerate deforestation. Our study highlights the importance of considering off-farm income in land-use models to better understand, model and possibly curb tropical deforestation.

Abstract:

1. How to simultaneously combat biodiversity loss and maintain ecosystem functioning while improving human welfare remains an open question. Optimization approaches have proven helpful in revealing the trade-offs between multiple functions and goals provided by land-cover configurations. The R package optim- Landuse provides tools for easy and systematic applications of the robust multiobjective land-cover composition optimization approach of Knoke et al. (2016). 2. The package includes tools to determine the land-cover composition that best balances the multiple functions a landscape can provide, and tools for understanding and visualizing the reasoning behind these compromises. A tutorial based on a published dataset guides users through the application and highlights possible use-cases. 3. Illustrating the consequences of alternative ecosystem functions on the theoretically optimal landscape composition provides easily interpretable information for landscape modelling and decision-making. 4. The package opens the approach of Knoke et al. (2016) to the community of landscape modellers and planners and provides opportunities for straightforward systematic or batch applications.

Abstract:

Sustainable intensification of agricultural lands might reconcile the conservation of tropical forest with food production,but in-depth assessments considering uncertainty and extreme values are missing. Uncertainty prohibits mapping probabilities to potential future states or ranking these states in terms of their likelihood. This in turn hampers the assessment of possible decision outcomes. Here, we use simulations to investigate how uncertainty may influence the social acceptability of alternative land-use strategies to halt tropical deforestation (including sustainable intensification), based on indicators representing farmer satisfaction. The results show how extreme values (worst values) for indicators of farmer satisfaction may undermine the adoption of sustainable intensification. We demonstrate that a pure forest conservation strategy leads to lower food production, but outperforms a sustainable intensification strategy that maintains food security. Pure forest conservation performed better, i.e., could secure higher farmer satisfaction, than sustainable intensification across a range of indicator groups. This suggests strong barriers to achieving sustainable intensification. Using agricultural subsidies breaks the dominance of pure forest conservation by enhancing the economic returns of sustainable intensification. We discuss the importance of access to labor and farmers’ preferences for the use of already cleared lands, which achieved the worst values under sustainable intensification and conclude that any assessment of land-use strategies requires careful consideration of uncertainty and extreme values.

Abstract:

Environmental studies regularly use the net present value (NPV) to value benefits and costs of projects. However, the NPV disregards whether the stream of net benefits is steady or volatile and ignores the distribution of net benefits among different groups of people. Here we test alternatives to NPV, building on two example cases: 1) We use discounted utility (DU) to evaluate land-use projects and calculate opportunity costs for avoided deforesta-tion. 2) We simulate decision-making on tropical deforestation, whereby we use multiple decision criteria to consider the distribution of net benefits between two groups: farmers and conservationists. Results show considerable differences in the ranking of projects between DU and NPV, when projects are not marginal. Compared to DU, NPV regularly overestimates the value of forest plantations. Moreover, NPV tends to overstate the opportunity costs of avoiding deforestation in terms of saved carbon emissions. Not accounting for the distribution of net benefits in optimizing land-use allocation leads to suboptimal simulated deforestation scenarios. We therefore suggest that future studies should either also use DU to value economic consequences of projects or that they use the NPV as only one among several socio-economic and ecological decision criteria.

Abstract:

Diversified agricultural landscapes have been shown to provide a wide range of ecosystem services. It is often stated that the main motivation behind growing multiple crops within a farm is to buffer farm income against market and climate risks. However, household characteristics, particularly the amount of off-farm income may also influence farm diversity. While the drivers of diversifying farm income have been investigated extensively,the ecologically important level of land-use diversity on a farm has seldom been used as a dependent variable. Based on data from 163 households, this paper analyzes the impact of social, economic and demographic household characteristics on crop diversification for farms located around the Laipuna Reserve in the dry forests of southern Ecuador. Using a Heckman two-step regression model, we identified factors that influence a) the probability that a farm will be diversified (PD) and b) the degree of diversification at the farm level (LUD), quantified by the Shannon index. We found that PD is positively related to the percentage of household members who depend on family income but do not work (economic dependence ratio), as well as river access and available family labor force. PD is inversely related to access to financial support (i.e. social payments and credits) and off-farm income. LUD is positively related to the number of household members and the age of the head of the household, and correlates negatively with labor force, financial support and off-farm income. Our results demonstrate that land-use diversification is not only a strategy to reduce risk, but it is also driven by farmers’ efforts to meet household, mainly subsistence, needs. Moreover, we also demonstrate that when households have access to financial support and off-farm income, the pressure to diversify their crops diminishes. Finally, we argue that forest and agricultural policies should impose instruments to support land-use diversification financially, while acknowledging the importance of financial support and off-farm income for household economies. Strategies to reduce poverty should be accompanied by direct support of land-use diversification, infrastructure development and agricultural training.

Abstract:

Abstract Conversion of tropical forests is among the primary causes of global environmental change. The loss of their important environmental services has prompted calls to integrate ecosystem services (ES) in addition to socio-economic objectives in decision-making. To test the effect of accounting for both ES and socio-economic objectives in land-use decisions, we develop a new dynamic approach to model deforestation scenarios for tropical mountain forests. We integrate multi-objective optimization of land allocation with an innovative approach to consider uncertainty spaces for each objective. These uncertainty spaces account for potential variability among decision-makers, who may have different expectations about the future. When optimizing only socio-economic objectives, the model continues the past trend in deforestation (1975–2015) in the projected land-use allocation (2015–2070). Based on indicators for biomass production, carbon storage, climate and water regulation, and soil quality, we show that considering multiple ES in addition to the socio-economic objectives has heterogeneous effects on land-use allocation. It saves some natural forest if the natural forest share is below 38%, and can stop deforestation once the natural forest share drops below 10%. For landscapes with high shares of forest (38%–80% in our study), accounting for multiple ES under high uncertainty of their indicators may, however, accelerate deforestation. For such multifunctional landscapes, two main effects prevail: (a) accelerated expansion of diversified non-natural areas to elevate the levels of the indicators and (b) increased landscape diversification to maintain multiple ES, reducing the proportion of natural forest. Only when accounting for vascular plant species richness as an explicit objective in the optimization, deforestation was consistently reduced. Aiming for multifunctional landscapes may therefore conflict with the aim of reducing deforestation, which we can quantify here for the first time. Our findings are relevant for identifying types of landscapes where this conflict may arise and to better align respective policies.

Abstract:

Bio-economic modelling has become a useful tool for anticipating the outcomes of policies and technologies before their implementation. Advances in mathematical programming have made it possible to build more comprehensive models. In an overview of recent studies about bio-economic models applied to land-use problems in agriculture and forestry,we evaluated howaspects such as uncertainty,multiple objective functions, system dynamics and time have been incorporated into models. We found that single objective models were more frequently applied at the farm level, while multiple objective modelling has been applied to meet concerns at the landscape level. Among the objectives, social aspects are seldom represented in allmodels, when being compared to economic and environmental aspects. The integration of uncertainty is occasionally a topic, while stochastic approaches are more frequently applied than non-stochastic robust methods. Mostmultiple-objectivemodels do not integrate uncertainty or sequential decision making. Static approaches continue to be more recurrent than truly dynamic models. Even though integrating multiple aspects may enhance our understanding of a system; it involves a tradeoff between complexity and robustness of the results obtained. Land-use models have to address this balance between complexity and robustness in order to evolve towards robust multiple-objective spatial optimization as a prerequisite to achieve sustainability goals.

Abstract:

In 201 3, the “Platform for Biodiversity and Ecosystem Monitoring and Research in South Ecuador” (www.TropicalMountainForest.org) was launched as a knowledge transfer program in the biodiversity hotspot of the southern Ecuadorian Andes, jointly funded by the German Research Foundation (DFG) and Ecuadorian non-university partners. One of the overall aims of the transdisciplinary program is to design science-directed recommendations for an ecologically sustainable, economically profitable and socially compatible use of the mainly rural land. The second major goal of the program is the development of functional indicators that are crucial for the monitoring of impacts of environmental change on the ecosystem and its functions. They encompass abiotic, abiotic-biotic and biotic-biotic interrelations, and are sensitive - though to different extent - to subtle changes in the environment. Therefore, it is not only the interaction per se, which has to be examined. In addition to that the quantification of the response to certain environmental stressors is needed. Representing the fundament of ecosystem functioning, biodiversity as such or certain functional taxa can be monitored for an assessment of the ecosystem’s state. Important further criteria for the selection of an indicator are general applicability, easiness of handling and stability against pitfalls. This book “Landscape Restoration, Sustainable Use and Cross-scale Monitoring of Biodiversity and Ecosystem Functions: A Science-directed Approach for South Ecuador” presents in its first part a compilation of sustainable land use concepts that have been proven for application in the Provinces Loja and Zamora Chinchipe and beyond, given comparable environmental conditions. The second part describes functional indicators as well as their development, monitoring and application. Both parts start with introductory chapters on the major aims of the respective transdisciplinary program, followed by contributions showing how land use concepts can be used to achieve sustainable management and ecosystem services, as well as how functional indicators can be used to assess and monitor the stability of biodiversity and ecosystem functions. It should be stressed that this book has not the aim to present only a scientific summary of the developed systems. Instead, it targets on stakeholders as our non-university partners and beyond which are in charge of environmental planning and ecosystem function surveillance in Ecuador. In the manner of a technical handbook, it gives a comprehensible introduction to the land use option or the indicator, followed by hints how to apply, implement and assess the developed systems. The book is and was complementing our three pillars of capacity building which also includes stakeholder workshops on the developed land use options and indicators, and demonstration plots in the field. With this book the authors highly acknowledge the generous funding of the research by the German Science Foundation (DFG) and the logistic, administrative and practical support by the foundation Naturaleza y Cultura Internacional (Loja and Del Mar). Such research requires also fruitful collaboration with local academic institutions, the Universidad Tecnica Particular de Loja, the Universidad Nacional de Loja, the Universidad de Cuenca, the Universidad de Azuay, and the local weather service INAMHI. These partnerships were a great experience in capacity building on both sides, as evidenced by a number of academic degrees obtained and by numerous joint publications. The authors are also grateful for the support of our nonuniversity research partners beyond NCI, namely ETAPA EP (Empresa Pública Municipal de Telecomunicaciones, Agua potable, lcantarillado y Saneamiento de Cuenca- Ecuador), the Gobierno Municipal de Zamora and the regional water fund FORAGUA (Fondo Regional del Agua). Further, sincere thanks are owed to the Ecuadorian Ministry of the Environment (MAE) for permission to conduct research in South Ecuador. The Editors

Abstract:

Increasing land-use conflicts call for the development of land-use systems that reconcile agricultural production with the provisioning of multiple ecosystem services, including climate change mitigation. Agroforestry has been suggested as a global solution to increase land-use efficiency, while reducing environmental impacts and economic risks for farmers. Past research has often focused on comparing tree-crop combinations with agricultural monocultures, but agroforestry has seldom been systematically compared to other forms of land-use diversification, including a farm mosaic. This form of diversification mixes separate parcels of different land uses within the farm. The objective of this study was to develop a modelling approach to compare the performance of the agroforestry and farm mosaic diversification strategies, accounting for tree-crop interaction effects and economic and climate uncertainty. For this purpose, Modern Portfolio Theory and risk simulation were coupled with the process-based biophysical simulation model WaNuLCAS 4.0. For an example application, we used data from a field trial in Panama. The results show that the simulated agroforestry systems (Taungya, alley cropping and border planting) could outperform a farm mosaic approach in terms of cumulative production and return. Considering market and climate uncertainty, agroforestry showed an up to 21% higher economic return at the same risk level (i.e. standard deviation of economic returns). Farm compositions with large shares of land allocated to maize cultivation were also more severely affected by an increasing drought frequency in terms of both risks and returns. Our study demonstrates that agroforestry can be an economically efficient diversification strategy, but only if the design allows for economies of scope, beneficial interactions between trees and crops and higher income diversification compared to a farm mosaic. The modelling approach can make an important contribution to support land-use decisions at the farm level and reduce land-use conflicts at the landscape level.

Abstract:

Postulating that megadiverse forests are more profitable than monocultures lacks economic evidence and may put conservation incentives at risk. Letter in Response to Liang et al. published in Science on October 14

Abstract:

High landscape diversity is assumed to increase the number and level of ecosystem services. However, the interactions between ecosystem service provision, disturbance and landscape composition are poorly understood. Here we present a novel approach to include uncertainty in the optimization of land allocation for improving the provision of multiple ecosystem services. We refer to the rehabilitation of abandoned agricultural lands in Ecuador including two types of both afforestation and pasture rehabilitation, together with a succession option. Our results show that high compositional landscape diversity supports multiple ecosystem services (multifunction effect). This implicitly provides a buffer against uncertainty. Our work shows that active integration of uncertainty is only important when optimizing single or highly correlated ecosystem services and that the multifunction effect on landscape diversity is stronger than the uncertainty effect. This is an important insight to support a land-use planning based on ecosystem services.

Abstract:

Due to ongoing conversion of the dry forests of southern Ecuador to pasture and farmland, they are among the most threatened ecosystems globally. This study explored how to control deforestation in the region while securing the livelihoods of local people through land-use diversification and compensation payments. Results are based on interview data collected from 163 households near the Laipuna Reserve in southern Ecuador. Combining modern financial theory and von Thünen’s theory of land distribution, we optimized land-use shares of two types of forest management (banning and allowing goat grazing) and three crops (maize, beans and peanuts). Land-use portfolios were calculated for four different farm sizes, represented by the quartiles of the farm size distribution. We found that goat grazing was important for diversifying farm income and reducing financial risks for all farm sizes. However, forest area would still be converted to cropland under the current financial coefficients. The amount of compensation needed to maintain current forest cover was calculated for two different scenarios: 1) banning goat grazing and 2) allowing forest use where the farmer could decide how much forest area would be allocated to each land-use option. Offering financial compensation for forest preservation (Scenario 1) reduced deforestation but would still lead to a conversion of at least 23?% of current forests to croplands. Allowing forest use in a compensation scheme (Scenario 2) would help retain 96?% of the current forest cover, with 29?% of this forest being set aside for conservation. This scenario would suppose annual payments ranging from $4 to $89 ha-1, with the largest farms requiring the lowest payments. In contrast, banning goats from the forest would even risk losing the entire forest area to cropland, if compensation fell below $50 ha-1 yr-1. We conclude that coupling productive options with secure compensation payments and developing policies that support land-use diversification and sustainable use of forest resources, will be most effective in conserving the Ecuadorian dry forest.

Abstract:

The theory of portfolio selection has often been applied to help improving decisions on the environment. The information required to apply this theory includes data on covariance of the uncertain returns between all combinations of the economic options and normally distributed returns. As it may be problematic to fulfil all data requirements and assumptions, the paper proposes a variant of robust portfolio optimization as an alternative. It considers future uncer-tainties in a non-stochastic fashion by means of possible deviations from the nominal return of land-use alternatives. The maximization of the economic return of the land-use portfolio is conditional to meeting an inclusive set of constraints. These demand that the same, whenever possible high, proportion of a required return threshold is achieved by means of the robust solution for each deviation scenario considered. The paper compares the land-use portfolios derived non-stochastically with portfolios generated by classical stochastic mean-variance op-timization. Based on data for eight agricultural crops typical for the Ecuadorian lowlands the results show that, depending on the deviation scenario assumed, the robust portfolios show a greater Shannon index compared to classical portfolios. For the same standard deviation of returns (derived through the classical sum of all covariances) the robust portfolios show no more than 2-5% loss in economic return in most cases. Occasionally, the loss has been higher, up to 20%. In this case the Shannon index was about 2.5 times higher compared with that of the conventional portfolio. The highly diverse portfolio achieved a much better protection against low relative performance. The results obtained show that the non-stochastic derivation of land-use portfolios is a good alternative to the classical stochastic model, whenever eco-nomic information is scarce.

Abstract:

Organic farming is a more environmentally friendly form of land use than conventional agriculture. However, recent studies point out production tradeoffs that often prevent the adoption of such practices by farmers. Our study shows with the example of organic banana production in Ecuador that economic tradeoffs depend much on the approach of the analysis. We test, if organic banana should be included in economic land-use portfolios, which indicate how much of the land is provided for which type of land-use. We use time series data for productivity and prices over 30 years to compute the economic return (as annualized net present value) and its volatility (with standard deviation as risk measure) for eight crops to derive land-use portfolios for different levels of risk, which maximize economic return. We find that organic banana is included in land-use portfolios for almost every level of accepted risk with proportions from 1% to maximally 32%, even if the same high uncertainty as for conventional banana is simulated for organic banana. A more realistic, lower simulated price risk increased the proportion of organic banana substantially to up to 57% and increased annual economic returns by up to US$ 187 per ha. Under an assumed integration of both markets, for organic and conventional banana, simulated by an increased coefficient of correlation of economic return from organic and conventional banana (? up to +0.7), organic banana holds significant portions in the land-use portfolios tested only, if a low price risk of organic banana is considered. We conclude that uncertainty is a key issue for the adoption of organic banana. As historic data support a low price risk for organic banana compared to conventional banana, Ecuadorian farmers should consider organic banana as an advantageous land-use option in their land-use portfolios.

Abstract:

Conflicts between satisfying the growing global demand for food and energy and simultaneously preserving natural ecosystems have spurred renewed debate about how to optimise future land use. This study reviews the role of forests and forest management within these proposed land-use strategies and reveals that discussions about future management of forest and agricultural lands take place largely exclusive of one another. Based on these results, a land-use concept is proposed in which sustainable agricultural intensification is paired with land-use diversification as a risk reduction strategy and complemented by productive restoration and compensation payments for forest conservation. Improving afforestation and agroforestry practices on degraded lands and investigating effects of diversification on the landscape scale are identified as important objectives for future interdisciplinary research. Considering forests as part of a comprehensive land-use portfolio will be vital in order to help strengthen links and ease conflicts between forest and agricultural land uses.

Abstract:

Increasing demands for livelihood resources in tropical rural areas have led to progressive clearing of biodiverse natural forests. Restoration of abandoned farmlands could counter this process. However, as aims and modes of restoration differ in their ecological and socio-economic value, the assessment of achievable ecosystem functions and bene?ts requires holistic investigation. Here we combine the results from multidisciplinary research for a unique assessment based on a normalization of 23 ecological, economic and social indicators for four restoration options in the tropical Andes of Ecuador. A comparison of the outcomes among afforestation with native alder or exotic pine, pasture restoration with either low-input or intense management and the abandoned status quo shows that both variants of afforestation and intense pasture use improve the ecological value, but low-input pasture does not. Economic indicators favour either afforestation or intense pasturing. Both Mestizo and indigenous Saraguro settlers are more inclined to opt for afforestation.

Abstract:

Approaches to reconciling food production with climatic and environmental protection often require agricultural intensification. The production of more food per unit of agricultural land through "sustainable intensification" is intended to enable the protection of natural ecosystems elsewhere (land sparing). However, there are problems associated with agricultural intensification; such as soil erosion, eutrophication or pollution of water bodies with chemicals, landscape homogenization and loss of biodiversity; for which solutions have not yet been found. Reuse of abandoned agricultural lands – which are abundant throughout the world – to address the rising demand for food is a potentially important alternative, which up to now has been widely ignored. To test the power of this alternative, equilibrium economic land allocation to various land-use practices by risk-avoiding tropical farmers in Ecuador was simulated. The reestablishment of pastures on abandoned cattle lands lowered prices for pasture products, and also triggered conversion of existing pasture into cropland. The resulting land-use change increased total annual food production in a moderate scenario from the current level of 17.8–23.1 petacalories (10^15 calories), which amounted to a production increase of 30%. At the same time, there was a 19% reduction in the amount of payments to farmers required to preserve tropical forests – one of the world’s greatest terrestrial carbon stores.

Abstract:

Schemes that reward developing countries for the mitigation of greenhouse-gas (GHG) emissions through preservation and restoration of their forests are becoming more common. However, efforts to reduce GHG emissions must also consider food production. This creates an apparent conflict, since agricultural production ? a key driver of GHG emissions as a consequence of forest clearance ? will increase as human populations continue to grow. We argue that a mix of small cropland and forest parcels enables sustainable intensification of agriculture by minimizing soil degradation . Economic analyses of the mixed land-use concept suggest an improvement of long-term economic performance by 19?25% relative to conventional industrial agriculture. Adopting this approach requires farm management plans, landscape zoning, and new instruments to finance sustainable agriculture. We conclude that climate policy and food production are reconciled through an integrative landscape concept that combines sustainable intensification of agriculture and reforestation of abandoned lands.

Abstract:

While many studies analyse patterns of tropical land management with a backward-oriented approach that utilises data of the past, we propose to consider future-oriented modelling approaches to find sustainable land-use options. This proposal is illustrated with application examples for advanced growth modelling in tropical forests, a short overview on financial performance analyses for tropical land uses, and the introduction of a newmodelling approach. Thismodelling approach sees tropical land management as a financial portfolio of land-use options. Its advantage is the ability to make transparent effects of financial risk reduction that arise from mixing forestry and agriculture-based land-use options. The approach thus does not analyse land uses as stand-alone options, like most other analyses do. The land-use portfolio modelling shows that sustainable land use may also be financially attractive for farmers, if abandoned farm lands are reforested (with a native tree species in our case) and sustainable management in natural forests is carried out. We conclude that the combination of advanced growth with sound financial modelling may lead to improved bioeconomic models. Developed bioeconomic models are necessary to increase the biological realism and acceptability of the results obtained.

Abstract:

We usually have only limited knowledge about the economic consequences of land-use decisions, thus they are uncertain. We analyze the implications of this uncertainty on conservation payments (CP) to preserve wildlife-friendly shade coffee production in southwest Ecuador, when conversion to maize is the most profitable alternative. Our objective is twofold: First, we analyze the consequences of applying Stochastic Dominance (SD) to derive CP, an approach making only minimal assumptions about the preferences of farmers. Second, we investigate the effects of land-use diversification to reduce CP by allowing for shade coffee on part of a landholding, and maize production on what remains. CP derived by SD turned out to be at least twice the amount calculated by an alternative method which maximizes a concave utility function?US$ 166 to US$ 294 ha-1 year-1 instead of US$ 86 ha-1 year-1. Given this result, we doubt that the assumptions underlying SD are reasonable for farmers, who are known to be riskaverse. Allowing for land-use diversification has a significant impact on CP. The optimal portfolio share of shade coffee is 27 % and for maize 73 % for moderately risk-averse farmers?without any CP. A larger share of shade coffee is preferable for strongly risk-averse farmers?51 and 49 % maize. The amount of CP necessary to encourage the expansion of shade coffee to 75 %is US$ 40 ha-1 year-1 (for moderately risk-averse) and US$ 19 ha-1 year-1 (for strongly risk-averse farmers). Stimulating diversification may thus help to significantly reduce CP necessary to preserve less profitable agroforestry options.

Abstract:

This paper analyses the effectiveness and distributional effects of payments to avoid tropical deforestation. As a first aspect, we investigated whether or not expected payments for avoided deforestation would be acceptable for tropical farmers in Southern Ecuador, with the study area located directly adjacent to the Podocarpus National Park. Second, we explored possible distributional effects resulting from voluntary or mandatory remuneration schemes to avoid deforestation. Finally, a productive sustainable land use was conceptualised to be combined with payments for avoided deforestation to avoid leakage (i.e. deforestation processes elsewhere when avoided at a given farm). Farm level land use scenarios with ("business as usual") and without deforestation ("conservation strategy") were compared. Compensation per Mg Carbon (C) that is not emitted into the atmosphere under the "conservation strategy" was derived to achieve a monetary land net present value (NPV, sum of discounted future net revenues) equal to the NPV obtained under "business as usual". Avoided carbon emissions were computed from above ground C in tropical forests of the project area and supplemented by information on soil carbon from another study. Economic data for cattle pasturing were obtained from a farm survey (130 households) to investigate distributional effects. To derive sustainable land use concepts, a risk sensitive bioeconomic farm model was used that considered effects of risk compensation when combining pasture with reforestation of abandoned farm lands and selective logging of natural forests. The results showed that only a few farmers (20 out of 130) would possibly accept a compensation price of US$ 10 per Mg avoided C emission, a C-compensation that is believed by other authors to reduce deforestation by 65%. Rather a compensation of around US$ 25 per Mg C was necessary to address compensation requirements of farmers who hold 50% of the tropical forest area in our study. The implementation of a voluntary remuneration scheme for avoided deforestation would not introduce systematic distributional effects (such as that only the biggest farmers would benefit from compensation), while a mandatory and enforced ban on deforestation coupled with a "fair" compensation payment equal to mean compensation requirements may lead to undesirable effects for many farmers. Finally, we demonstrate a mixed sustainable land use concept that depended on cheap credits for reforestation of abandoned pasture lands. This concept was able to stop farm level deforestation and to enlarge the economic value of farms through various combined land use options (agricultural and forestry options). The combination of land uses led to risk compensatory effects and a more efficient land use by reintegrating unproductive abandoned areas back into the economical process. In our conclusion a combination of payments for avoided deforestation along with productive land use concepts provided a viable solution for tropical forest conservation.

Abstract:

Analyses were carried out on financial compensation to avoid loss of tropical forests and related carbon (C) emissions when marginal financial yield declined for land-use options with extended areas, and when a riskaverting perspective (modeled according to financial theory around the capital asset pricing model) is assumed. The approach in this study was to consider natural forest, forest plantation, pasture, and cropland simultaneously to investigate how an optimized land-use distribution may reduce the amount of compensation necessary to avoid C emissions from forest loss. The financial compensations derived were as high as US$ 176 per hectare per year when comparing natural forests only with the most profitable alternative (croplands). However, compensation decreased to US$ 124 for risk-neutral decision-makers, who would strive for optimized land-use allocation, and to only US$ 47 per hectare per year for risk-avoiders, who would look to maximize the reward-to-variability ratio. Sensitivity analyses indicated that the compensation under risk-aversion increased much less than under risk-ignoring when increased productivity of agricultural land-use or growing demand for agricultural products was simulated. It was concluded that considering appropriate diversification strategies and the well documented human behavior to avoid risks is an important step in developing cost-effective compensation policies.

Abstract:

If tropical farmers cannot be provided with sustainable land-use systems, which address their subsistence needs and keep them gainfully employed, tropical forests will continue to disappear. We looked at the ability of economic land-use diversification ? with reforestation of tropical ?wastelands? as a key activity ? to halt deforestation at the farm level. Our ecological?economic concept, based on land-use data from the buffer area of the Podocarpus National Park in southern Ecuador, shows that stopping deforestation after 10 years is possible without violating subsistence demands. Tropical, farm-level diversification may not only reduce total deforestation by 45%, but also increase farmers? profits by 65%, because the formerly unproductive wastelands have been returned to productive land use. We therefore conclude that a ?win?win? scenario is possible: the subsistence needs of people can be reconciled with conservation objectives. However, inexpensive microcredits (at interest rates below 6%) and experience on alternative land-use opportunities must be offered to farmers.

Abstract:

SIR ? Your Editorial ?Markets can save forests? proposes integrating deforestation into the international carbon market (Nature 452, 127?128; 2008), but it is unlikely that money alone can solve the problem. The process of tropical deforestation presents a dilemma: enormous economic value more than US$ 2,000 a year per hectare is lost in favour of small private benefits (often less than US$ 100 a year per hectare). In a true market, an increased, scarcity-signalling price should provide an incentive to boost the supply of the scarce commodity. So far, this has not worked in the case of tropical forests. Real financial flows received for the provision of ecosystem services are vanishingly small, if they exist at all ? only a few beneficiaries have been convinced to pay for environmental services. This illustrates the essentially theoretical character (at least, up till now) of economic values generated by ecosystem services. Payments for ecosystem services (PES) are supposed to save tropical forests. But even if it were possible to mobilize substantial PES, tropical farmers wouldn?t be prepared to stand by and twiddle their thumbs while receiving these payments to protect the forest. They need a field of activity, so sustainable land-use concepts should address the social environment and needs of people as well. These concepts could be linked and possibly financed by PES. If the people who use tropical lands are disregarded, we don?t believe that PES will solve the problem of disappearing tropical forests. What is needed is an economic system that keeps people gainfully employed in an activity that is ultimately productive, not destructive.