Agriculture Reference
In-Depth Information
for farmers because of the risk associated with the value of one's investment tied up
in a long-cycle crop such as a tree crop where future prices may be uncertain.
Another reason is that farmers may be reluctant to trade the production risk associ-
ated with subsistence crops for three other types of risks: yield risk for timber, price risk
for the timber, and price risk for the staple food purchased. As a risk-coping mechanism,
farmers may want to diversify their investments, and hence income. Diversification is
simply captured in the principle of not putting “all the eggs in one basket” (Pandey
2000). The risk of income shortfall is reduced by growing several crops that have nega-
tively or weakly correlated returns. The effect of price risk on the profitability of alterna-
tive land use systems is examined in the risk analysis section.
14.3.4.3
Social Profitability and the Value of Carbon Sequestration
The social profitability of each system was assessed using a social discount rate of
10 percent plus the imputed value of carbon sequestration but the other benefits and
costs were still evaluated at market prices. When the value of carbon sequestration
was accounted for, the NPVs for tree-based land use systems increased but the rela-
tive ranking of alternative land use systems remained unchanged with the TPLUS
system realizing the highest benefit from biomass carbon payments of about PhP
42,321 ha
−1
for a period of 20 years (Table 14.6).
Table 14.6
Net present values (PhP ha
−1
) with imputed value of carbon sequestration of alterna-
tive land use systems over 20 years at 10 percent discount rate, Claveria, Misamis Oriental,
The Philippines
Land use
system
NPV
without C
(a)
ANB
with-
out C
(b)
NPV of
biomass C
(c)
NPV of
soil C
(d)
NPV with
biomass C
(e = a + c)
ANB
with
biomass C
(f)
NPV with
biomass
and soil C
(g = a
+ c + d)
ANB
with bio-
mass
and soil C
IMPLUS
498
58
0
264,782
498
58
265,280
31,160
FPLUS
30,913
3,631
0
243,113
30,913
3,631
274,026
32,187
TIMPLUS
149,459
17,555
10,866
261,138 160,325
17,007
421,464
44,709
TCLUS
185,762
21,819
14,282
259,660 200,043
21,220
459,703
48,765
TCSFLUS
381,466
44,807
21,472
259,291 402,938
42,743
662,230
70,249
TPLUS
1,019,206 119,716
42,321
265,643 1,061,527 112,606
1,327,170 140,785
Marginal benefit:
FPLUS-
IMPLUS
30,415
3,573
0
−21,669
30,415
3,573
8,747
1,027
TIMPLUS-
IMPLUS
148,961
17,497
10,866
−3,643 159,827
16,949
156,184
13,549
TCLUS-
IMPLUS
185,264
21,761
14,282
−5,121 199,545
21,162
194,424
17,605
TCSFLUS-
IMPLUS
380,968
44,748
21,472
−5,490 402,440
42,685
396,950
39,089
TPLUS-
IMPLUS
1,018,708 119,657
42,321
861 1,061,029 112,547
1,061,890 109,626
US$1 = P51, June 2001
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