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Decreasing uncertainties and reversing paradigms on the economic performance of agroforestry systems in Brazil

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  • Martinelli, Gabrielli do Carmo
  • Schlindwein, Madalena Maria
  • Padovan, Milton Parron
  • Gimenes, Régio Marcio Toesca

Abstract

The return on investment in agroforestry depends mainly on meteorological and market variables, both uncontrollable. For this, it is necessary to prepare investment projects to verify the feasibility before executing them, minimizing the risks and uncertainties to the farmer. In this sense, the study aimed to identify the economic and financial viability of a biodiverse agroforestry system to boost income generation and recovery of degraded areas. For this, it was decided to model a biodiverse agroforestry arrangement with the purpose of meeting the new Brazilian Forest Code, Law no. 12,651 of 2012 and promoting economic-financial return to the family farmer in the state of Mato Grosso do Sul. The study method considered the following capital investment valuation techniques: Net Present Value (NPV), Internal Rate of Return (IRR), Equivalent Uniform Annual Worth (EUAW), Discounted Payback Period (DPP), Profitability Index (PI), Modified Internal Rate of Return (MIRR), Benefit Cost Ratio (BCR) and Capital Asset Pricing Model (CAPM). In addition, sensitivity and risk analyzes were developed using Software R (R Development Core Team). There were 10,000 interactions between variables of productivity, price and variable costs. The results demonstrate that the agroforestry system is significantly viable regardless of whether the farmer owns rural property, since net sales revenues can remain higher than the costs over 20 years.

Suggested Citation

  • Martinelli, Gabrielli do Carmo & Schlindwein, Madalena Maria & Padovan, Milton Parron & Gimenes, Régio Marcio Toesca, 2019. "Decreasing uncertainties and reversing paradigms on the economic performance of agroforestry systems in Brazil," Land Use Policy, Elsevier, vol. 80(C), pages 274-286.
    • Handle: RePEc:eee:lauspo:v:80:y:2019:i:c:p:274-286
    DOI: 10.1016/j.landusepol.2018.09.019
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    2. Phimmavong, Somvang & Maraseni, Tek Narayan & Keenan, Rodney J. & Cockfield, Geoff, 2019. "Financial returns from collaborative investment models of Eucalyptus agroforestry plantations in Lao PDR," Land Use Policy, Elsevier, vol. 87(C).
    3. Murakami, Lia Yukari K. & Massi, Klécia Gili & Mendes, Tatiana Sussel G., 2023. "Socioeconomic aspects of riparian vegetation debt in the state of Sao Paulo, Brasil," Land Use Policy, Elsevier, vol. 130(C).
    4. Pontes, Laíse da Silveira & Porfírio-da-Silva, Vanderley & Moletta, José Luiz & Telles, Tiago Santos, 2021. "Long-term profitability of crop-livestock systems, with and without trees," Agricultural Systems, Elsevier, vol. 192(C).
    5. Claudia de Brito Quadros Gonçalves & Madalena Maria Schlindwein & Gabrielli do Carmo Martinelli, 2021. "Agroforestry Systems: A Systematic Review Focusing on Traditional Indigenous Practices, Food and Nutrition Security, Economic Viability, and the Role of Women," Sustainability, MDPI, vol. 13(20), pages 1-20, October.
    6. Min Li & Apurbo Sarkar & Yuge Wang & Ahmed Khairul Hasan & Quanxing Meng, 2022. "Evaluating the Impact of Ecological Property Rights to Trigger Farmers’ Investment Behavior—An Example of Confluence Area of Heihe Reservoir, Shaanxi, China," Land, MDPI, vol. 11(3), pages 1-23, February.
    7. Gori Maia, Alexandre & Eusebio, Gabriela dos Santos & Fasiaben, Maria do Carmo Ramos & Moraes, Andre Steffens & Assad, Eduardo Delgado & Pugliero, Vanessa Silva, 2021. "The economic impacts of the diffusion of agroforestry in Brazil," Land Use Policy, Elsevier, vol. 108(C).

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