Planning optimal economic strategies for agroforestry systems

Abstract

Design of agroforestry systems requires a land management planning process that clearly specifies wants, needs and objectives along with the land's suitability for potential agroforestry practices. Within this planning process economic analysis can be used to analyze agroforestry alternatives to help determine the proper system to apply. Specifically, production economics coupled with capital theory and valuation techniques can provide measures of economic performance in terms of present net values, benefit-cost ratios and internal rates of return. These economic performance measures can be used to determine the best joint production level for a particular agroforestry practice. Once these best combinations have been defined, linear programming can be applied using these ‘best’ joint production combinations as decision variables along with considering a wide range of additional constraints and requirements. A hypothetical example is used to illustrate the planning process and how these economic tools can be combined as a package to help determine optimal agroforestry strategies.