Dark clouds building up over trees? A simulation-based assessment of smallholder acacia investment in Ethiopia

Habtamu Yismaw, Christian Troost and Thomas Berger

No 344393, IAAE 2024 Conference, August 2-7, 2024, New Delhi, India from International Association of Agricultural Economists (IAAE)

Abstract: This study simulates the economic effects of acacia diseases on smallholder farmers in the Upper Nile basin of the Ethiopian highlands, utilizing agent-based simulation analysis. Acacia, introduced in the 1990s, has become integral to the local agroforestry, enhancing soil fertility and providing significant economic benefits. However, recent outbreaks of acacia diseases threaten these gains. Our simulations suggest that income effects will be severe if the diseases make acacia production completely unprofitable. If interventions like fungicide applications and genetically robust seedlings are able to effectively counteract the diseases, acacia production will remain profitable even with the increased costs to apply these measures. However, they will most likely only partly compensate for the income losses, especially because of an expected delay until they can be introduced. The remaining income loss will still be substantial within the first 4-8 years after the disease outbreak. Our findings emphasize the necessity of timely and strategic management practices to support agricultural resilience. The study underscores the importance of innovative agricultural practices and targeted interventions to enhance the financial sustainability of smallholder farmers facing environmental challenges. Further research is needed to explore the role of acacia in soil fertility improvement, its impact on subsequent crop yields, potentially exacerbating interaction effects with interannual crop yield and price variability, and a detailed representation of livestock production activities. Additionally, the potential of off-farm work as an adaptation strategy warrants deeper investigation.

Keywords: Farm Management; Land Economics/Use; Research Methods/ Statistical Methods (search for similar items in EconPapers)
Pages: 21
Date: 2024-07-26
New Economics Papers: this item is included in nep-agr and nep-inv
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Persistent link: https://EconPapers.repec.org/RePEc:ags:cfcp15:344393

DOI: 10.22004/ag.econ.344393

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