Abstract
We usually have only limited knowledge about the economic consequences of land-use decisions, thus they are uncertain. We analyze the implications of this uncertainty on conservation payments (CP) to preserve wildlife-friendly shade coffee production in southwest Ecuador, when conversion to maize is the most profitable alternative. Our objective is twofold: First, we analyze the consequences of applying Stochastic Dominance (SD) to derive CP, an approach making only minimal assumptions about the preferences of farmers. Second, we investigate the effects of land-use diversification to reduce CP by allowing for shade coffee on part of a landholding, and maize production on what remains. CP derived by SD turned out to be at least twice the amount calculated by an alternative method which maximizes a concave utility function—US$ 166 to US$ 294 ha−1 year−1 instead of US$ 86 ha−1 year−1. Given this result, we doubt that the assumptions underlying SD are reasonable for farmers, who are known to be risk-averse. Allowing for land-use diversification has a significant impact on CP. The optimal portfolio share of shade coffee is 27 % and for maize 73 % for moderately risk-averse farmers—without any CP. A larger share of shade coffee is preferable for strongly risk-averse farmers—51 and 49 % maize. The amount of CP necessary to encourage the expansion of shade coffee to 75 % is US$ 40 ha−1 year−1 (for moderately risk-averse) and US$ 19 ha−1 year−1 (for strongly risk-averse farmers). Stimulating diversification may thus help to significantly reduce CP necessary to preserve less profitable agroforestry options.
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Notes
III Censo Nacional Agropecuario (Third National Census for Agriculture and Livestock).
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Acknowledgments
We want to express our gratitude to the Deutsche Forschungsgemeinschaft (DFG) for their financial support (KN 586/5-2) and to the members of the research group FOR 816. The authors also wish to thank Mr. Jason Kreiselman and Mrs. Laura Carlson for the language editing.
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Castro, L.M., Calvas, B., Hildebrandt, P. et al. Avoiding the loss of shade coffee plantations: how to derive conservation payments for risk-averse land-users. Agroforest Syst 87, 331–347 (2013). https://doi.org/10.1007/s10457-012-9554-0
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DOI: https://doi.org/10.1007/s10457-012-9554-0