Economics and Agroforestry

The concept of sustainability is an underlying theme in much of the literature dealing with the economics of agroforestry. Four major areas of concern for economic investigation into sustainable agroforestry systems― profitability, dynamics, externalities, and markets―are addressed using ex­ amples from the available literature. Finally, the social constraints that farmers face when adopting agroforestry technologies are discussed. Upon examining the literature on the economics of agroforestry, one is struck by two reoccurring themes― sustainability and fanning systems research and extension (FSR/ E). Sustainability is often the justification for much of the work being done in agroforestry. Reid (1989) states that, worldwide, as much as one-half of all forest clearing is done to replace degraded agricultural land. However, the removal of forests is often counterproductive because trees, either used in rotation with other crops or grown concurrently with them, are seen to allow the maintenance of a higher level of soil fertility than continuous monocrop production (Weirsum 1981, Vergara 1987, Kang and others 1989). Farming systems research and extension is frequently recommended as the preferred method in dealing with the complexities of agroforestry systems and with their introduction into complex social systems (Michie 1986, Wallace and Jones 1986). Sustainability is often a vaguely defined concept (Batie 1989). An example is the definition given by Harwood (1988) as quoted by Francis and Hilderbrand (1989): ... an agriculture that can evolve indefinitely toward greater human utility, greater efficiency of resource use and a balance with the environment that is favorable both to humans and to most other species. A somewhat better definition is that of the World Commis­ sion on Environment and Development (Reid 1989):... meets the needs and aspirations of the present without compromising the ability of future generations to meet their own needs. Both of these definitions express the basic precept that we should not rob future generations to fulfill our current greed. However, they do not provide much guidance as to how to proceed towards a sustainable agriculture; rather, they are state­ ments of an ethical position. Reganold and others (1990) provide a description of what sustainable agriculture should be: For a farm to be sustainable, it must produce adequate amounts of high quality food, protect its resources and be both environmentally safe and profitable. This is both a definition of a sustainable farm and a list of conditions which must be met in order for the farm to succeed. The first condition is that the farm must provide adequate amounts of high quality food. This also implies that the farm must satisfy 1 An abbreviated version of this paper was presented at the Workshop on Research Methodologies and Applications for Pacific Island Agroforestry, July 16-20, 1990, Kolonia, Pohnpei, Federated States of Micronesia. 2 Agricultural Experiment Station, College of Agriculture and Life Sci­ ences, University of Guam, Mangilao, Guam 96923. the demands of its markets. This is true whether the produce is consumed on the farm or if it is sold. The second condition is that the farm must protect its resources, a reference to the dynamic aspect of sustainability. The farm exists not only in the present, but also in the future. The farmer must take into account the usage and stock of his resources over time. The third condition is that the farm must be environmentally safe, a reference to what economists call externalities. Farming systems have effects both on and off the farm. Off-farm exter­ nalities, such as sedimentation and chemical pollution of water supplies, must be considered in the social valuation of farming systems. Finally, the farm must be profitable. The farming sys­ tem must meet the needs of its operators. A farmer does not farm without constraints―societal constraints, the limits of his time, and financial and physical constraints. To be adopted, a farming system (e.g., agroforestry) must meet a farmer’s needs better than alternative systems. Reganold and others have provided four areas of concern for economic investigation into sustainable agroforestry sys­ tems: 1) profitability, the farmer's behavior of optimizing subject to constraints, 2) dynamics (time), 3) externalities and 4) markets. The remainder of this paper will discuss each of these areas.