Understanding and modelling the ambiguous impact of off-farm income on tropical deforestation

Few land-allocation models consider the impact of off-farm income on tropical deforestation. We provide a concept to integrate off-farm income in a mechanistic multiple-objective land-allocation model, while distinguishing between farms with and without re-allocation of on-farm labor to obtain off-farm income. On farms with re-allocation of labor we found that off-farm income reduced farmers’ financial dependency on deforestation-related agricultural income leading to less tropical deforestation. The influence of off-farm income covered two aspects: availability of additional income and re-allocation of on-farm labor to off-farm activities. The labor effect tended to reduce deforestation slightly more than the income effect. On farms without re-allocation of on-farm labor we showed how farmers can use off-farm income to purchase additional labor to accelerate deforestation. Our study highlights the importance of considering off-farm income in land-use models to better understand, model and possibly curb tropical deforestation.</p

Ecuadorian Banana Farms Should Consider Organic Banana with Low Price Risks in Their Land-Use Portfolios

<div><p>Organic farming is a more environmentally friendly form of land use than conventional agriculture. However, recent studies point out production tradeoffs that often prevent the adoption of such practices by farmers. Our study shows with the example of organic banana production in Ecuador that economic tradeoffs depend much on the approach of the analysis. We test, if organic banana should be included in economic land-use portfolios, which indicate how much of the land is provided for which type of land-use. We use time series data for productivity and prices over 30 years to compute the economic return (as annualized net present value) and its volatility (with standard deviation as risk measure) for eight crops to derive land-use portfolios for different levels of risk, which maximize economic return. We find that organic banana is included in land-use portfolios for almost every level of accepted risk with proportions from 1% to maximally 32%, even if the same high uncertainty as for conventional banana is simulated for organic banana. A more realistic, lower simulated price risk increased the proportion of organic banana substantially to up to 57% and increased annual economic returns by up to US$ 187 per ha. Under an assumed integration of both markets, for organic and conventional banana, simulated by an increased coefficient of correlation of economic return from organic and conventional banana (ρ up to +0.7), organic banana holds significant portions in the land-use portfolios tested only, if a low price risk of organic banana is considered. We conclude that uncertainty is a key issue for the adoption of organic banana. As historic data support a low price risk for organic banana compared to conventional banana, Ecuadorian farmers should consider organic banana as an advantageous land-use option in their land-use portfolios.</p></div

Structural composition of various land-use portfolios for increasing levels of accepted economic risk when organic banana is included and has high (a) or low economic risks (b).

<p>Structural composition of various land-use portfolios for increasing levels of accepted economic risk when organic banana is included and has high (a) or low economic risks (b).</p

Correlation of price changes for conventional and organic banana [58, 59].

<p>Correlation of price changes for conventional and organic banana [<a href="http://www.plosone.org/article/info:doi/10.1371/journal.pone.0120384#pone.0120384.ref058" target="_blank">58</a>, <a href="http://www.plosone.org/article/info:doi/10.1371/journal.pone.0120384#pone.0120384.ref059" target="_blank">59</a>].</p

Harvest planning for balsa and laurel, adapted from Proforestal.^*

<p>*Proforestal is the Office for the Promotion of Forestry in Ecuador (MAGAP)</p><p>** Diameter at breast height</p><p>Harvest planning for balsa and laurel, adapted from Proforestal.^{<a href="http://www.plosone.org/article/info:doi/10.1371/journal.pone.0120384#t002fn001" target="_blank">*</a>}</p

Distributions of gross revenues from time series data used for bootstrapping and expected distribution under the normality assumption.

<p>Organic bananas as well as forestry options were modelled by means of assumed normal distributions.</p

Correlation coefficients of land-use options.

<p>Correlation coefficients of land-use options.</p

Maximum expected economic return achievable of diversified land-use portfolios for various levels of potentially accepted economic risk compared to economic returns of single land-use options.

<p>Maximum expected economic return achievable of diversified land-use portfolios for various levels of potentially accepted economic risk compared to economic returns of single land-use options.</p

Structural composition of various land-use portfolios without organic banana for increasing levels of accepted economic risk.

<p>Structural composition of various land-use portfolios without organic banana for increasing levels of accepted economic risk.</p

Farms in the Babahoyo sub-basin producing the land-use options modeled, arranged by size and area of production.

<p>Farms in the Babahoyo sub-basin producing the land-use options modeled, arranged by size and area of production.</p