lipper l constraints to adoption of salm and implications july 2011
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Presentation for Smallholder Mitigation: Mitigation Options and Incentive Mechanisms - Expert Workshop 7 - 8 July 2011TRANSCRIPT
Economics of
sustainable agricultural
systems
E S A S
Everything you always wanted to know about:
Constraints to adoption of sustainable land management practices
L. Lipper N..McCarthy and G. Branca
(Agricultural Development Economics Division, FAO)
Smallholder Mitigation: Mitigation Options and Incentive Mechanisms Expert Workshop
Rome, June 7-8 , 2011
Economics of
sustainable agricultural
systems
E S A S
Importance of SLM • Poor soil fertility is a key constraint to agricultural productivity growth
and thus food security/poverty reduction • Increasing soil fertility is an important component of many developing
country ag. development strategies (particularly Africa in CAADP)
• Increasing soil fertility (SOC) has potential adaptation and mitigation benefits (IPCC 4AR – soil carbon largest technical and economic potential source of mitigation) Adaptation benefits through improved WHC, diversification, pest and disease resistance
• Years of attempts to promote adoption of SLM have shown there are considerable barriers that have generally not yet been overcome
Question- if SLM is so good for farmers as well as the environment – why is the adoption rate so low?
Economics of
sustainable agricultural
systems
E S A S
Barriers to adoption: • Tenure Security: lack of tenure security and limited property rights (limits on transfer), may hinder adoption of SLM
• Limited Access to Information, e.g. very low levels of investment/support for agriculture research and extension
• Up-‐front Hinancing costs can be high, whilst on-‐farm beneHits not realized until medium-‐long term – Local credit markets very thin – Local insurance options very limited
Classic barriers to technology adoption apply in SLM case:
Economics of
sustainable agricultural
systems
E S A S
Adoption Barriers: Tenure Security & Common-Pool Resources
§ SLM practices may require collective action, e.g. management of communal resources (forests, grazing resources), and provision of local public investments (soil & water management measures)
§ Lack of tenure security and limited property rights (limits on transfer), may hinder adoption of SLM § But… § Customary tenure does not equal insecure tenure § Titles/certificates to land does not necessarily lead to increased
access to formal credit § Ambiguous, complex rights to land often function as an
insurance mechanism… e.g. for weather shocks
Photos: FAO Mediabase
Economics of
sustainable agricultural
systems
E S A S
Adoption Barriers: Lack of Access to Information
§ Very low levels of investment/support for agriculture research and extension in many countries
• Quiggins & Horowitz 2003 “Information held…becomes more diffuse. Less valuable in the presence of a new source of uncertainty.Thus climate change may be regarded as destroying information.”
• Implying even greater barriers as CC effects are felt...
Photos: FAO Mediabase
Economics of
sustainable agricultural
systems
E S A S
Adoption Barriers: Short run trade-‐offs even where long run is
win-‐win
• Photos: FAO Mediabase
B. Investment Barrier to Adoption
Time ==>
Baseline net income Current net income
• Temporary net loss to farmer
• New management practices introduced
Source: FAO 2007
Economics of
sustainable agricultural
systems
E S A S
Examples of establishment and maintenance costs of SLM
Establishment
costs
Average maintenance
costsUS$/ha US$/ha/year
Grevillea agroforestry system, Kenya 160 90Shelterbelts, Togo 376 162Different agroforestry systmes in Sumatra, Indonesia 1,159 80Intensive agroforestry system (high input, grass barriers, contour ridging), Colombia
1,285 145
Small-scale conservation tillage, Kenya 0 93Minimum tillage and direct planting, Ghana 220 212Medium-scale no-till technology for wheat and barley farming, Morocco
600 400
Natural vegetative strips, The Philippines 84 36Grassed Fanya juu terraces, Kenya 380 30Konso bench terrace, Ethiopia 2,060 540Compost production and application , Burkina Faso 12 30Tassa planting pits, Niger 160 33Runoff and floodwater farming, Ethiopia 383 814
Improved pasture management
Grassland restoration and conservation, Qinghai province, China (1)
65 12
Rotational grazing, South Africa 105 27Grazing land improvement, Ethiopia 1,052 126
Sources: Wocat 2007, Liniger et al. 2011, FAO 2009, Cacho et al. 2003
Various agro-forestry practices
Conservation agriculture (CA)
Improved agronomic practices
Improved grazing management
Soil and water conservation
Agro-forestry
Improved pasture and grazing management
(1) Project estimates
Technology options Practices Case study
Integrated nutrient management
Economics of
sustainable agricultural
systems
E S A S
An example of opportunity costs of implementing improved grazing management practices (3 Rivers Project, Qinghai province, China)
• project aim: SLM to increase livestock productivity (grassland restoration zoning and stocking rate management)
• C Hinance (voluntary market) used to compensate foregone income during the transition period (pilot prj)
Baseline net income
NPV/HA over 20 years
No years to positive cash flow
No of years to positive incremental net income compared to baseline
net income
($/ha/yr) ($/ha) (number of years) (number of years)Small 14.42 118 5 10
Medium 25.21 191 1 4Large 25.45 215 1 1
Source: Wilkes 2011
Size of herd
Economics of
sustainable agricultural
systems
E S A S
But are these costs reflected in MACCs?
-‐60
-‐100
-‐80
60
80
-‐20
40
-‐40
20
0
Reduced deforesta4on from pastureland conversion
Wind (high penetra4on)
Abatement poten+al Gt CO2e
10 15 20
Breakdown by abatement type • 9 Gt for terrestrial carbon (forestry and agriculture)
• 6 Gt for energy efficiency • 4 Gt for low carbon energy supply
Source: McKinsey Global GHG Abatement Cost Curve v2.0
Ligh4ng: switch CFLs to LEDs, residen4al
Economics of
sustainable agricultural
systems
E S A S
Public investment to support adoption may also not be fully costed
• Source: Sutter, Bockel and Tinlot 2011: Afolu sectors and climate change in Nigeria FAO
Economics of
sustainable agricultural
systems
E S A S We need to understand full costs of SLM adoption better to
design effective incentive mechanisms – until now there is probably a signiHicant underestimate of the transition costs that will be required to achieve high adoption levels and signiHicant food security, adaptation and mitigation beneHits.
In particular we need to focus on:
Information barriers and how they change under climate change Opportunity costs over a transition period and how they vary by income group
Public sector investments required to support SLM adoption and incentives
Conclusions
Economics of
sustainable agricultural
systems
E S A S
THANK YOU!