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Valuing Agroforestry In The Presence Of Land Degradation

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  • Cacho, Oscar J.

Abstract

Agroforestry can help prevent land degradation while allowing continuing use of land to produce crops and livestock. A problem with the evaluation of agroforestry using long-run static models and traditional discounting techniques is that the present value of the forestry enterprise is generally much lower than that of other production activities. This problem is common with Australian native species which tend to have a high environmental value but a low market value. This paper presents an economic analysis of an agroforestry operation in land prone to degradation and in the presence of positive externalities provided by trees. The value of the land is estimated based on the present value of expected returns in perpetuity under optimal management. Simulation analysis is used to evaluate the loss in land value caused by dryland salinity. A nonlinear programming model is developed and used to study the effects of timber prices and forest planting costs on optimal forest area and the level of salinity. Elasticities of relevant variables with respect to prices and costs are derived and policy implications of results are discussed.

Suggested Citation

  • Cacho, Oscar J., 1999. "Valuing Agroforestry In The Presence Of Land Degradation," Working Papers 12931, University of New England, School of Economics.
    • Handle: RePEc:ags:uneewp:12931
    DOI: 10.22004/ag.econ.12931
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    References listed on IDEAS

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    Cited by:

    1. Hean, Robyn L. & Cacho, Oscar J. & Signor, Anthony & Mullen, John D., 2000. "The Potential Role of Farm Forestry in the Wheat-Sheep Zone of NSW," 2000 Conference (44th), January 23-25, 2000, Sydney, Australia 123659, Australian Agricultural and Resource Economics Society.

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