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

Abstract:

Economic approaches based on the probabilistic framework were applied to support land use management in Ecuador. Compensations to prevent further land conversion resulted lower when a concave utility function was used. Diversification applied to risky conventional farming showed that sustainable options are suited for portfolios if correlation between returns is kept low; in every case at least two options constituted the optimal combinations. Thus, despite limitations of bio-economic models, they constitute a reliable tool for normative orientations at the farm level.

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