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

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:

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.