Stochastic Economic Assessment of Afforestation on Marginal Land in Irrigated Farming System

Utkur Djanibekov () and Asia Khamzina ()

Environmental & Resource Economics, 2016, vol. 63, issue 1, 95-117

Abstract: We analysed the economic viability of afforestation on marginal irrigated croplands in irrigated drylands of Uzbekistan. The revenues derived from a combination of diversified agricultural production, carbon sequestration, nitrogen fixation, and avoided irrigation water use were analysed considering uncertainty associated with on-farm activities such as crop production and short-rotation forestry. At the per hectare scale variability in land-use revenues would necessitate substantial increases in carbon prices for afforestation to be as profitable as crop cultivation on marginal lands, assuming an abundant irrigation water supply. In contrast, at the farm scale the analysis results revealed that afforestation can be attractive financially even without carbon payments due to farm production constraints, variable land-use returns, and the benefits of land-use diversification. Increased carbon prices would promote carbon sequestration by motivating farmers to plant high biomass producing tree species, but would have an ecosystem service trade-off by reducing the appeal of nitrogen-fixing species that are essential for nitrogen self-sufficiency of afforestation efforts. Given the modest irrigation needs of afforestation efforts compared to the cultivation of annual crops, tree plantations could become a primary income source for farms during periods of drought. Irrigation water saved from replacing crops with trees on marginal farmland would enhance the cultivation of commercial crops on productive lands, thus increasing farm income. Copyright Springer Science+Business Media Dordrecht 2016

Keywords: Farm income risk; Ecosystem services; Ecosystem service trade-offs; Land-use diversification; Expected utility; Stochastic dominance (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (11)

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DOI: 10.1007/s10640-014-9843-3

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