Promoting sustainable upland farming:what does economics tell us?

Motivation

Upland agriculture– low input (labor is often the limiting resource)– low income (few assets, limited opportunities)– diversification strategies widespread

Upland environments– fragile landscapes– environmental resources remain vulnerable– off-site effects are often a concern

Policy concerns– twin goals of development & protection– limited responses to some policies?

Upland decisions

Activity choice

what crops to grow?what to do with household labor?

Area expansion

clear forest?shorten fallows?

Technology adoption

what farming methods?chemical input intensities?soil conservation methods?

Approach – review four studies

Activities– Policy response (Manupali watershed)– Tree-planting (Southern Palawan)

Forest clearing– Response to job opportunities (Palawan)

Technology adoption– Soil conservation (Davao del Sur)

Annual Crop Production

PerennialProduction

Off-farmEmployment

Upland Activities

Economics predicts…

upland households will equate returns across activities

Table 1 – Cropping patterns in Lantapan

Average slope (%)

Corn(area share)

Coffee(area share)

Vegetable(area share)

Zone 135% 0.06 0.08 0.86

Zone 2 25% 0.16 0.11 0.73

Zone 3 10% 0.47 0.10 0.42

Zone 4 5% 0.59 0.06 0.35

Table 2 – Income shares in Lantapan

Incomequartile

Crops LivestockOff-farm

workNon-Farm

work

Top 0.33 0.03 0.09 0.54

2nd 0.26 0.02 0.24 0.48

3rd 0.25 0.06 0.32 0.37

Bottom 0.31 0.17 0.26 0.27

Shifting effort – simulation model approach

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)

Gov’t budget

(P/ha/yr)

Sediment(% ch)

Nitrogen(% ch)

P’cide(% ch)

Veg Ban -15% 0 -37% -69% -100%

SC subsidy 0% -391 -46% -50% -52%

20% veg tax-12% 529 -15% -27% -39%

SC + veg tax -15% 318 -49% -56% -62%

Tree (mango) adoption

Southern Palawan (1994)100+ upland rice and corn farmersRetrospective examination of tree planting

over the period 1981-94Average farm size 2.9 ha

Table 4 – Mango planting regressions

Number of trees  

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 +

Policy insight:

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

Southern Palawan, 1994-2000 Upland and 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:

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

Soil conservation

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

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:

Household capacity matters– Labor, land and tenure were key variables influencing

soil conservation adoption

Three areas for policy optimism

Efforts to promote perennial crops through can lead to tree planting by smallholders.

Potential solutions to upland “problems” may be found in the lowlands. The labor market can “pull” labor away from forests.

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.