The benefits Anderson lists are reductions in crop loss through avoided reduc-
tions in soil fertility, increases in crop yield caused by better moisture reten-
tion and nutrient cycling, increases in livestock productivity caused by the
availability of dry season fodder from trees, and the value of the tree products
themselves as fuelwood, poles, and fruits.
A large part of the analysis involves the physical estimation of response
functions, that is, how crop yields and fodder supply respond to tree planting.
In terms of economic valuation, the procedures are simple because in all cases
market prices are available to value the changes in productivity and output.
Table 4.2 shows the resulting benefit-cost ratios (i.e., the ratio of the present
value of benefits to the present value of costs). This is somewhat more mean-
ingful than citing absolute figures for net present values.
The base case allows the tree-growing project to generate benefits against
the backdrop of an assumed 1 percent per annum decrease in soil fertility. The
“no erosion” and “wood benefits only” cases assume no erosion, whereas the
low- and high-yield cases also assume 1 percent erosion, as does the “soil
restored” case. In contrast, the rapid erosion case assumes a 2 percent per
annum decline in soil fertility.
For a project to be prima facie worthwhile, the benefit-cost ratio should
exceed 1. If projects were looked at in the traditional way (i.e., in terms of the
timber benefits only), then the project would fail a benefit-cost test (ratios are
0.3 and 0.6, so costs exceed benefits). But once the additional benefits are
included, the ratios quickly rise above 1. Moreover, for farm forestry the ratios
are high, systematically above 2 and with the potential for 4–6. These are very
high rates of return. The only apparent anomaly is the fact that if erosion rates
are higher, the rate of return to the planting program is lower. Anderson argues
that this is because the benefits of improving seriously degraded soil are less
- The Economic Valuation of Agroforestry’s Environmental Services 79
Table 4.2. Net benefits of agroforestry in northern Nigeria.
Shelterbelt Farm Forestry
Type of System Benefit-to-Cost Ratio Benefit-to-Cost Ratio
Base case 2.2 4.5
Low yield, high costa 1.7 2.3
High yield 2.6 —
No erosion 1.8 2.9
More rapid erosion 1.8 2.5
Soil restored to initial condition 2.9 6.1
plus yield jumpb
Wood benefits only 0.3 0.6
Source:Anderson (1987).
aSorghum, millet, cowpeas, and groundnuts.
bAssumes favorable ecological conditions.