Promoting sustainable upland farming what does economics tell

Promoting sustainable upland farming: what does economics tell us?

Motivation l Upland agriculture – low input (labor is often the limiting resource) – low income (few assets, limited opportunities) – diversification strategies widespread l Upland environments – fragile landscapes – environmental resources remain vulnerable – off-site effects are often a concern l Policy concerns – twin goals of development & protection – limited responses to some policies?

Upland decisions l Activity choice what crops to grow? what to do with household labor? l Area expansion clear forest? shorten fallows? l Technology adoption what farming methods? chemical input intensities? soil conservation methods?

Approach – review four studies l Activities – Policy response (Manupali watershed) – Tree-planting (Southern Palawan) l Forest clearing – Response to job opportunities (Palawan) l Technology adoption – Soil conservation (Davao del Sur)

Upland Activities Annual Crop Production Perennial Production Off-farm Employment Economics predicts… upland households will equate returns across activities

Table 1 – Cropping patterns in Lantapan Average slope (%) Zone 1 Zone 2 Zone 3 Zone 4 Corn (area share) Coffee Vegetable (area share) 35% 0. 06 0. 08 0. 86 25% 0. 16 0. 11 0. 73 10% 0. 47 0. 10 0. 42 5% 0. 59 0. 06 0. 35

Table 2 – Income shares in Lantapan Income Livestoc quarti Crops k le Offfarm wor k Non. Farm work Top 0. 33 0. 09 0. 54 2 nd 0. 26 0. 02 0. 24 0. 48 3 rd 0. 25 0. 06 0. 32 0. 37 Bottom 0. 31 0. 17 0. 26 0. 27

Shifting effort – simulation model approach l l l Constructed based on data from Manupali watershed in 1998 4 agroecological zones 4 representative households per zone Optimizing decisions in response to changes in economic variables Measurement of aggregate environmental indicators (sediment, chemical loads)

Table 3 – Simulation results HH income (% ch) Veg Ban SC subsidy 20% veg tax Gov’t budget (P/ha/yr) Sediment (% ch) Nitrogen (% ch) P’cide (% ch) -15% 0 -37% -69% -100% 0% -391 -46% -50% -52% -12% 529 -15% -27% -39% -15% 318 -49% -56% -62% SC + veg tax

Tree (mango) adoption l Southern Palawan (1994) l 100+ upland rice and corn farmers l Retrospective examination of tree planting over the period 1981 -94 l Average farm size 2. 9 ha

Table 4 – Mango planting regressions Farm size Age of household head Current mango price Current corn price Current rice price Forecast mango price change Forecast corn price change Forecast rice price change Corn price risk Rice price risk Number of trees + + +

Policy insight: l Relative prices matter – Farmers are responsive to changes in relative prices – Tree planting responded to price incentives – Risk considerations are a factor

Upland forest clearing regressions l l l Southern Palawan, 1994 -2000 Upland lowland households Data covers a period in which lowland farms became irrigated 100 upland rice farmers Land use, labor allocation, and forest clearing decisions Impact of lowland irrigation on upland decisions

Table 5 – upland deforestation regressions labor supply Clearing Fertilizer Lowland irrigation HH workers + + Farm size + - + Age of hh head Educ of hh head - - + Pala’wan Carabao + - Tenure security Farm income shadow wage Shadow val. fert. + - + + +

Policy insight: l Off-farm opportunities matter – Farmers are responsive to changes in opportunities – Land clearing was reduced when employment expanded

Soil conservation Southern Mindanao (1995) l 115 upland corn farmers l Contour hedgerows for soil conservation l

Table 6 – Soil conservation adoption Per capita farm size + Labor availability per hectare + Tenure security + Education of household head + Non-ag, non-wage income - Wage income + Ratio of cost of adoption to annual production -

Policy insight: l Household capacity matters – Labor, land tenure were key variables influencing soil conservation adoption

Three areas for policy optimism l Efforts to promote perennial crops through can lead to tree planting by smallholders. l Potential solutions to upland “problems” may be found in the lowlands. The labor market can “pull” labor away from forests. l Subsidies for labor-intensive technologies are not likely to be effective where labor and land are limiting resources, but extension efforts will continue to be important.