Carbon revenue in the profitability of agroforestry relative to monocultures

Pirjetta Waldén,Helena Kahiluoto,Markku Ollikainen

doi:10.1007/s10457-019-00355-x

Pirjetta Waldén, Helena Kahiluoto + Show 1 more

Open Access

https://doi.org/10.1007/s10457-019-00355-x

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Abstract

The impact of carbon revenue on the profitability of agroforestry systems in comparison to monocultures is unexplored in regard to Sub-Saharan Africa. This study creates a multivariate model to evaluate the impact of carbon revenue on the profitability of agroforestry relative to the dominant monocultures in Ethiopia by using stylized plots. Yields and carbon stock changes of eight agroforestry systems were modeled based on data from agroforestry plots in the Ethiopian Central Rift Valley. According to our model, agroforestry was, on average, four times more profitable than the main monoculture systems (wheat, barley, maize, teff, sorghum, sugarcane and lentil) even when carbon revenues were excluded, primarily due to the higher prices of fruit produce. Carbon revenues were estimated using a plausible carbon price ranging from US$8/tCO2e to $40/tCO2e and carbon sequestration rates of 0.59 to 17.2 Mg C ha−1 year−1. The possibility of receiving carbon revenue increased the profitability of agroforestry by 0.5% when using the lowest utilized carbon price and carbon sequestration rate, by 20% when using the carbon price of $20 and the average carbon sequestration rate, and by 70% when using the highest price and highest sequestration rate of carbon. On average, carbon revenue increased the profitability of agroforestry by 150% in comparison to monoculture farming. We conclude that carbon income may have significant potential to motivate smallholders to convert to agroforestry when there is a proper management system, a sufficiently high carbon price and effective institutional support to mitigate the transition and transaction costs.

Highlights

There is a need for new practices and policies to mitigate climate change
This paper evaluates the economic impact of carbon revenue on the profitability of multistrata smallholder Agroforestry systems (AFSs), and its impact relative to the dominant monocultures found in Ethiopia
Our study concludes that carbon income may have a significant potential to motivate the conversion of arable land to agroforestry by East African smallholders when there is proper management, a sufficiently high carbon price, and efficient institutions

Summary

Introduction

There is a need for new practices and policies to mitigate climate change. Such practices and policies should facilitate adaptation in local communities in developing countries. Agroforestry systems (AFSs) may be able to accomplish both goals, i.e., to mitigate climate change while improving food security and the local economy. Increased carbon stock can provide environmental services, social benefits, and potentially monetary benefit from the carbon market through carbon revenue. Carbon revenue could be an incentive for the adoption of sustainable agricultural practices, increasing soil productivity while restoring degraded drylands and abating climate change. SubSaharan Africa has the highest rate of land degradation in the world due to low amounts of soil organic carbon and nutrients leading to low yields and reduced food security

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