IDEAS home Printed from https://ideas.repec.org/a/eee/lauspo/v71y2018icp293-302.html
   My bibliography  Save this article

The cost effectiveness of payments for ecosystem services—Smallholders and agroforestry in Africa

Author

Listed:
  • Benjamin, Emmanuel O.
  • Sauer, Johannes

Abstract

Certain smallholder farmers in parts of sub-Saharan Africa engage in conservation agriculture and participate in agroforestry ecosystem services schemes that generate additional on-farm revenues through payment for ecosystem services (PES). However, smallholder farmers that are inadequately compensated for the foregone income from agricultural production due to marginal ecosystem services provision have no incentive to participate. On the other hand, over-compensating participating farmers will also lead to PES schemes inefficiencies. Therefore, stakeholders are confronted with the challenge of evaluating farm-level interactions between agricultural production and ecosystem services’ provision when making strategic decisions on the efficient level of compensation. We propose in this contribution to assess the efficiency of PES schemes by measuring the marginal cost of ecosystem services based on farm level bio-economic interactions. The quantitative assessment is based on a theoretical classification of the relationship between marketed agricultural output and ecosystem services into complementary, supplementary or competitive. We use a flexible transformation function and cross-sectional data on 120 surveyed smallholder farmers with agroforestry certification in rural Mount Kenya. The results suggest that the joint production (of agricultural output and ecosystem services) for a substantial number of smallholder farms in Kenya may not show a complementary relationship. The biophysical linkage between marketed outputs and ecosystem services strongly influences the marginal cost of ecosystem services. PES schemes could become more efficient if they would target smallholder farms based on the aforementioned classifications by offering a range of contracts to encourage competitive bidding.

Suggested Citation

  • Benjamin, Emmanuel O. & Sauer, Johannes, 2018. "The cost effectiveness of payments for ecosystem services—Smallholders and agroforestry in Africa," Land Use Policy, Elsevier, vol. 71(C), pages 293-302.
    • Handle: RePEc:eee:lauspo:v:71:y:2018:i:c:p:293-302
    DOI: 10.1016/j.landusepol.2017.12.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264837716309917
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.landusepol.2017.12.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Emmanuel O. Benjamin* & Matthias Blum, 2015. "Participation of smallholders in agroforestry agri-environmental scheme: A lesson from the rural mount Kenyan region," Journal of Developing Areas, Tennessee State University, College of Business, vol. 49(4), pages 127-143, October-D.
    2. Wossink, Ada & Swinton, Scott M., 2007. "Jointness in production and farmers' willingness to supply non-marketed ecosystem services," Ecological Economics, Elsevier, vol. 64(2), pages 297-304, December.
    3. Pagiola, Stefano & Arcenas, Agustin & Platais, Gunars, 2005. "Can Payments for Environmental Services Help Reduce Poverty? An Exploration of the Issues and the Evidence to Date from Latin America," World Development, Elsevier, vol. 33(2), pages 237-253, February.
    4. Diewert, W. E., 1973. "Functional forms for profit and transformation functions," Journal of Economic Theory, Elsevier, vol. 6(3), pages 284-316, June.
    5. Ronald G. Felthoven & Catherine J. Morrison Paul, 2004. "Multi-Output, Nonfrontier Primal Measures of Capacity and Capacity Utilization," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 619-633.
    6. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    7. Emmanuelle Quillérou & Rob Fraser & Iain Fraser, 2011. "Farmer Compensation and its Consequences for Environmental Benefit Provision in the Higher Level Stewardship Scheme," Journal of Agricultural Economics, Wiley Blackwell, vol. 62(2), pages 330-339, June.
    8. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    9. Smith, Joyotee & Scherr, Sara J., 2003. "Capturing the Value of Forest Carbon for Local Livelihoods," World Development, Elsevier, vol. 31(12), pages 2143-2160, December.
    10. Emmanuel Olatunbosun Benjamin & Matthias Blum & Maarten Punt, 2016. "The impact of extension and ecosystem services on smallholder’s credit constraint," Journal of Developing Areas, Tennessee State University, College of Business, vol. 50(1), pages 333-350, January-M.
    11. Stephen Polasky & Kathleen Segerson, 2009. "Integrating Ecology and Economics in the Study of Ecosystem Services: Some Lessons Learned," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 409-434, September.
    12. Patrick Puhani, 2000. "The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, vol. 14(1), pages 53-68, February.
    13. Benjamin, Emmanuel Olatunbosun & Sauer, Johannes, 2016. "Cost efficiency of smallholder payment for ecosystem services (PES) scheme in rural Kenya," 56th Annual Conference, Bonn, Germany, September 28-30, 2016 244865, German Association of Agricultural Economists (GEWISOLA).
    14. Johannes Sauer & Ada Wossink, 2013. "Marketed outputs and non-marketed ecosystem services: the evaluation of marginal costs," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 40(4), pages 573-603, September.
    15. Dale, Virginia H. & Polasky, Stephen, 2007. "Measures of the effects of agricultural practices on ecosystem services," Ecological Economics, Elsevier, vol. 64(2), pages 286-296, December.
    16. Wunscher, Tobias & Engel, Stefanie & Wunder, Sven, 2011. "Opportunity Costs as a Determinant of Participation in Payments for Ecosystem Service Schemes," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 115779, European Association of Agricultural Economists.
    17. Adeleke Oluwole Salami & Abdul Kamara & Zuzana Brixiova, 2010. "Working Paper 105 - Smallholder Agriculture in East Africa: Trends, Constraints and Opportunities," Working Paper Series 242, African Development Bank.
    18. Johannes Sauer, 2011. "The Empirical Identification of Heterogenous Technologies and Technical Change," Post-Print hal-00768585, HAL.
    19. Current, Dean & Lutz, Ernst & Scherr, Sara J, 1995. "The Costs and Benefits of Agroforestry to Farmers," The World Bank Research Observer, World Bank, vol. 10(2), pages 151-180, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Valatin, G. & Ovando, P. & Abildtrup, J. & Accastello, C. & Andreucci, M.B. & Chikalanov, A. & El Mokaddem, A. & Garcia, S. & Gonzalez-Sanchis, M. & Gordillo, F. & Kayacan, B. & Little, D. & Lyubenova, 2022. "Approaches to cost-effectiveness of payments for tree planting and forest management for water quality services," Ecosystem Services, Elsevier, vol. 53(C).
    2. Benjamin, Emmanuel O. & Ola, Oreoluwa & Buchenrieder, Gertrud, 2018. "Does an agroforestry scheme with payment for ecosystem services (PES) economically empower women in sub-Saharan Africa?," Ecosystem Services, Elsevier, vol. 31(PA), pages 1-11.
    3. Qian Guo & Oreoluwa Ola & Emmanuel O. Benjamin, 2020. "Determinants of the Adoption of Sustainable Intensification in Southern African Farming Systems: A Meta-Analysis," Sustainability, MDPI, vol. 12(8), pages 1-13, April.
    4. Emmanuel Olatunbosun Benjamin, 2020. "Smallholder Agricultural Investment and Productivity under Contract Farming and Customary Tenure System: A Malawian Perspective," Land, MDPI, vol. 9(8), pages 1-17, August.
    5. Benra, Felipe & Nahuelhual, Laura, 2019. "A trilogy of inequalities: Land ownership, forest cover and ecosystem services distribution," Land Use Policy, Elsevier, vol. 82(C), pages 247-257.
    6. Ding, Zhenmin & Yao, Shunbo, 2021. "Ecological effectiveness of payment for ecosystem services to identify incentive priority areas: Sloping land conversion program in China," Land Use Policy, Elsevier, vol. 104(C).
    7. Ileana Pătru-Stupariu & Constantina Alina Hossu & Simona Raluca Grădinaru & Andreea Nita & Mihai-Sorin Stupariu & Alina Huzui-Stoiculescu & Athanasios-Alexandru Gavrilidis, 2020. "A Review of Changes in Mountain Land Use and Ecosystem Services: From Theory to Practice," Land, MDPI, vol. 9(9), pages 1-21, September.
    8. Martinelli, Gabrielli do Carmo & Schlindwein, Madalena Maria & Padovan, Milton Parron & Gimenes, Régio Marcio Toesca, 2019. "Decreasing uncertainties and reversing paradigms on the economic performance of agroforestry systems in Brazil," Land Use Policy, Elsevier, vol. 80(C), pages 274-286.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Benjamin, Emmanuel Olatunbosun & Sauer, Johannes, 2016. "Cost efficiency of smallholder payment for ecosystem services (PES) scheme in rural Kenya," 56th Annual Conference, Bonn, Germany, September 28-30, 2016 244865, German Association of Agricultural Economists (GEWISOLA).
    2. Gorton, Matthew & Sauer, Johannes & Peshevski, Mile & Bosev, Dane & Shekerinov, Darko & Quarrie, Steve, 2009. "Water Communities in the Republic of Macedonia: An Empirical Analysis of Membership Satisfaction and Payment Behavior," World Development, Elsevier, vol. 37(12), pages 1951-1963, December.
    3. Golder, Stefan M., 2000. "Endowment or Discrimination? An Analysis of Immigrant-Native Earnings Differentials in Switzerland," Kiel Working Papers 967, Kiel Institute for the World Economy (IfW Kiel).
    4. Mikhail Zhelonkin & Marc G. Genton & Elvezio Ronchetti, 2016. "Robust inference in sample selection models," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 78(4), pages 805-827, September.
    5. Sanguinetti, Pablo & Volpe Martincus, Christian, 2009. "Tariffs and manufacturing location in Argentina," Regional Science and Urban Economics, Elsevier, vol. 39(2), pages 155-167, March.
    6. Bo Xiong & Sixia Chen, 2014. "Estimating gravity equation models in the presence of sample selection and heteroscedasticity," Applied Economics, Taylor & Francis Journals, vol. 46(24), pages 2993-3003, August.
    7. Cumming, Douglas & Fleming, Grant & Schwienbacher, Armin, 2006. "Legality and venture capital exits," Journal of Corporate Finance, Elsevier, vol. 12(2), pages 214-245, January.
    8. Tran, N. & Wilson, N. & Hite, D., 2012. "Choosing the best model in the presence of zero trade: a fish product analysis," Monographs, The WorldFish Center, number 40064, April.
    9. Kragt, Marit E. & Robertson, Michael J., 2014. "Quantifying ecosystem services trade-offs from agricultural practices," Ecological Economics, Elsevier, vol. 102(C), pages 147-157.
    10. Hyejung Kang, 2007. "Productivity Growth in Korean Agriculture, 1998-2002: Analysis of Multi- Output Production Technolog," Korean Economic Review, Korean Economic Association, vol. 23, pages 433-457.
    11. Douglas Cumming & Grant Fleming & Armin Schwienbacher, 2009. "Corporate Relocation in Venture Capital Finance," Entrepreneurship Theory and Practice, , vol. 33(5), pages 1121-1155, September.
    12. Ola, Oreoluwa & Menapace, Luisa & Benjamin, Emmanuel & Lang, Hannes, 2019. "Determinants of the environmental conservation and poverty alleviation objectives of Payments for Ecosystem Services (PES) programs," Ecosystem Services, Elsevier, vol. 35(C), pages 52-66.
    13. Son K. Lam & Thomas E. DeCarlo & Ashish Sharma, 2019. "Salesperson ambidexterity in customer engagement: do customer base characteristics matter?," Journal of the Academy of Marketing Science, Springer, vol. 47(4), pages 659-680, July.
    14. Stolowy, Hervé & Jeanjean, Thomas & Erkens, Michael, 2011. "The economic consequences of increasing the international visibility of financial reports," HEC Research Papers Series 957, HEC Paris.
    15. Renneboog, L.D.R. & Szilagyi, P.G., 2009. "Shareholder Activism through the Proxy Process," Other publications TiSEM cc25d736-2965-4511-b100-1, Tilburg University, School of Economics and Management.
    16. Barbara Langlois & Vincent Martinet, 2023. "Defining cost-effective ways to improve ecosystem services provision in agroecosystems," Review of Agricultural, Food and Environmental Studies, Springer, vol. 104(2), pages 123-165, June.
    17. Zhang, Yeqing & Zhang, Xueyong, 2020. "Patent growth and the long-run performance of VC-backed IPOs," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 33-47.
    18. P.W. Miller & S. Rummery, 1989. "Gender Wage Discrimination in Australia: A reassessment," Economics Discussion / Working Papers 89-21, The University of Western Australia, Department of Economics.
    19. Marcus Asplund, 2000. "What Fraction of a Capital Investment is Sunk Costs?," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 287-304, September.
    20. Pagiola, Stefano & Rios, Ana R. & Arcenas, Agustin, 2008. "Can the poor participate in payments for environmental services? Lessons from the Silvopastoral Project in Nicaragua," Environment and Development Economics, Cambridge University Press, vol. 13(3), pages 299-325, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:lauspo:v:71:y:2018:i:c:p:293-302. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joice Jiang (email available below). General contact details of provider: https://www.journals.elsevier.com/land-use-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.