Woodchips or potato chips? How enhancing soil carbon and reducing chemical inputs influence the allocation of cropland

Abstract

ContextFarmers are facing increasing pressure to practice multifunctional agriculture. Producing woody biomass through short rotation coppices (SRC) provides an economic opportunity for farmers to diversify their agricultural income while potentially providing environmental benefits. ObjectiveUsing multi-objective, robust optimization we investigate the extent to which SRC may help farmers to reconcile the economic objective of profit maximization with ecological concerns related to enhancing soil carbon and reducing the use of chemical inputs (nitrogen fertilizers and pesticides). MethodsTo evaluate the costs and benefits of SRC relative to conventional agricultural crops, we use empiric and modelled data from Bavaria, Germany. Based on this performance data our optimization model determines the best mix of land-uses (land-use portfolio) for reconciling multiple objectives under uncertainty. We compare the optimal portfolios for two decision perspectives: profit oriented (in which the decision-maker only considers economic return) and multifunctional (in which the three ecological objectives are considered in addition to economic return). Both perspectives consider that farmers seek protection against downside risks. Results and conclusionsFrom the profit-oriented perspective, SRC was selected in the optimal portfolios (comprising 34% of the land area) derived for more risk-tolerant decision-makers, but was absent from the portfolio optimized for a strongly risk-averse decision-maker. Instead, higher woodchip prices may be required to make SRC economically attractive for strongly downside risk-averse farmers. In contrast, SRC was selected in the multifunctional portfolio (with 24-33% land-use shares) for all levels of risk aversion. We found that the selection of SRC helped to mitigate the financial costs of multifunctionality, increasing both the average and worst-case economic return of the multifunctional portfolio. SignificanceOur study reveals new insights concerning the influence of uncertainties and downside risk associated with SRC on anticipated farmer decisions and suggests that cultivating SRC can help reduce trade-offs between economic and ecological objectives.