nomic return. Showing that agroforestry has multiple benefits, then, is a vital
first step in arguing the case for agroforestry.
To provide some substance to this apparently simple argument we need to
investigate further precisely what is meant by net economic benefits.The pic-
ture quickly becomes more complicated. First, we need to distinguish between
economic returns to the farmer and economic returns to society as a whole.
The farmer tends to focus on what the economist would call private economic
returns. These are essentially the financial revenues obtained from the given
use of the land minus any financial costs. Revenues and costs are not timeless;
they occur over specified periods of time. The horizon for these costs and ben-
efits tends to be set by the farmer, but also relevant are any biological factors
affecting the horizon. For example, if land use involves the taking of natural
tree species or growing of plantation species, the time horizon could be influ-
enced by the period of the rotation or the time until optimal production. The
farmer’s time horizon may or may not coincide with such biological horizons.
Although there are exceptions, in poor societies time horizons tend to be
short; people do not look very far ahead (Poulos and Whittington 2000;
Cuesta et al. 1997). In the economist’s language, poor people are said to dis-
count the future highly. Their focus is on what they can secure this year, next
year, and a few years hence. Looking far into the future is a luxury that the
poor cannot often afford.
Other factors also determine the degree of discounting. For example, in
traditional slash-and-burn systems, the time horizon for a specific piece of
land may appear very short and is determined by the period over which crop
yields can be sustained from the initial (often poor) capital endowment of fer-
tile soil, plus the nutrient base derived from the initial burn. There may be no
concern to look beyond this period, perhaps 5–10 years, if it is known that
there is further frontier land that can be colonized. There is evidence that if
the frontier is closed (i.e., substitute land is not available), farmers will take
more care of existing land and will seek sustainable use of it (Tiffen et al.
1994). Similarly, land for which there are secure property rights is far more
likely to be farmed sustainably than land with insecure property rights. In the
latter case farmers can easily be dispossessed by more powerful agents, includ-
ing governments. The rate at which farmers discount the future in this case
tends to be very high because the discount rate incorporates the risk of dispos-
session. We return to this discounting argument shortly. For the moment, we
note that the less secure property rights are and the more frontier land is avail-
able, the higher the rate of discount is likely to be. High discount rates are
consistent with mining the nutrients of the land (i.e., treating land as an
exhaustible resource rather than as a sustainable, renewable resource).
The revenues and costs to the farmer must be distinguished from the flow
of economic benefits and costs to society as a whole. Because society includes
the farmers, their private costs and benefits are subsets of the wider social costs
- The Economic Valuation of Agroforestry’s Environmental Services 69