Agroforestry development: An environmental economic perspective

Abstract

Agroforestry systems (AFS) provide a mix of market goods and nonmarket goods and services. We postulate that if nonmarket goods and services can be internalized to the benefit of landowners, the adoption of AFS will increase. Using the theory of externality as a conceptual framework, this paper provides an environmental economic logic for developing incentive policies to internalize environmental services especially in the industrialized countries. Specifically, the paper addresses the following questions with focus on North America in general and southern United States in particular: What is the effect of environmental costs and benefits on the adoption of silvopasture? Do households care for carbon sequestration, water quality improvement, and biodiversity associated with silvo-pasture? Will they be willing to pay for them? If so, how much? Will ranchers adopt more silvopasture if incentives are provided? Which incentive policy, a price premium or a direct payment, is more effective? It has been found that the profitability of silvopasture would increase, relative to conventional ranching, if environmental services are included. Estimates of public willingness to pay for environmental services associated with silvopasture and estimates of ranchers’ willingness to accept for the adoption of silvopasture will provide a scientific basis for policy development.