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Tree-crop interactions and their environmental and economic implications in the presence of carbon-sequestration payments

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  • Wise, Russell M.
  • Cacho, Oscar J.

Abstract

Growing trees with crops has environmental and economic implications. Trees can help prevent land degradation and increase biodiversity while at the same time allow for the continued use of the land to produce agricultural crops. In fact, growing trees alongside crops is known to improve both the productivity and sustainability of the land. However, due to high labour-input requirements, high costs of establishment, and delayed revenue returns, trees are often not economically attractive to landholders. Because of the Kyoto Protocol, and the growing emphasis on market-based solutions to environmental problems, the ability of trees to sequester and store CO2 has altered the economic landscape of agroforestry systems. The economic and management implications of carbon-sequestration payments on agroforestry systems are addressed in this study using a bioeconomic modelling approach. An agroforestry system in Indonesia is simulated using a biophysical process model. A general economic analysis of this system, from the standpoint of individual landholders, is then developed and the implications for management and policy are discussed.

Suggested Citation

  • Wise, Russell M. & Cacho, Oscar J., 2003. "Tree-crop interactions and their environmental and economic implications in the presence of carbon-sequestration payments," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 58271, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare03:58271
    DOI: 10.22004/ag.econ.58271
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    References listed on IDEAS

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    1. Cacho, Oscar, 2001. "An analysis of externalities in agroforestry systems in the presence of land degradation," Ecological Economics, Elsevier, vol. 39(1), pages 131-143, October.
    2. Wise, Russell M. & Cacho, Oscar J., 2002. "A Bioeconomic Analysis of Soil Carbon Sequestration in Agro-Forests," 2002 Conference (46th), February 13-15, 2002, Canberra, Australia 125612, Australian Agricultural and Resource Economics Society.
    3. Cacho, Oscar J. & Marshall, Graham R. & Milne, Mary, 2005. "Transaction and abatement costs of carbon-sink projects in developing countries," Environment and Development Economics, Cambridge University Press, vol. 10(5), pages 597-614, October.
    4. Menz, Kenneth M. & Magcale-Macandog, Damasa & Rusastra, I Wayan (ed.), 1999. "Improving Smallholder Farming Systems in Imperata Areas of Southeast Asia: Alternatives to Shifting Cultivation," Monographs, Australian Centre for International Agricultural Research, number 114830.
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    Cited by:

    1. Oscar Cacho & Leslie Lipper, 2006. "Abatement and Transaction Costs of Carbon-Sink Projects Involving Smallholders," Working Papers 06-13, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    2. Wise, Russell M. & Cacho, Oscar J., 2006. "Optimal Land-Use Decisions in the Presence of Carbon Payments and Fertilizer Subsidies: An Indonesian Case Study," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25356, International Association of Agricultural Economists.

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