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The Economics and Ecology of Shade-grown Coffee: A Model to Incentivize Shade and Bird Conservation

Author

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  • Hernandez-Aguilera, J. Nicolas
  • Conrad, Jon M.
  • Gómez, Miguel I.
  • Rodewald, Amanda D.

Abstract

Shade-grown coffee, which is grown under a forest-like canopy of trees, is a production system widely regarded as environmentally sustainable and enabling for biodiversity conservation. Although shade-coffee systems enhance pest-control services from birds, there is an important potential tradeoff, namely lower coffee yields. Yet few studies have explicitly examined this tradeoff and the economic incentives required for smallholders to adopt shade practices rather than conventional systems, in which coffee is grown in full sun or little shade. We formulated a dynamic optimization problem to model a grower's decision to convert land from conventional to shade-grown production based on (1) expected yields and costs of each system, (2) gains from pest-control services provided by birds and (3) price premiums for higher-quality, sustainably-grown coffee. Our results suggest that at least 36% of a five-hectare farm should be allocated to shade-grown coffee to maximize inter-temporal income. This proportion is positively related to (1) production savings associated with birds, (2) prices for shade-grown and conventional coffees, (3) number of trees used for shade and (4) yields of shade-grown coffee. We show that smallholders have incentives to allocate more land to shade-grown coffee when they benefit from bird conservation under the appropriate market conditions.

Suggested Citation

  • Hernandez-Aguilera, J. Nicolas & Conrad, Jon M. & Gómez, Miguel I. & Rodewald, Amanda D., 2019. "The Economics and Ecology of Shade-grown Coffee: A Model to Incentivize Shade and Bird Conservation," Ecological Economics, Elsevier, vol. 159(C), pages 110-121.
  • Handle: RePEc:eee:ecolec:v:159:y:2019:i:c:p:110-121
    DOI: 10.1016/j.ecolecon.2019.01.015
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    References listed on IDEAS

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    1. Sara D. Elder & Jane Lister & Peter Dauvergne, 2014. "Big retail and sustainable coffee: A new development studies research agenda," Progress in Development Studies, , vol. 14(1), pages 77-90, January.
    2. Valkila, Joni, 2009. "Fair Trade organic coffee production in Nicaragua -- Sustainable development or a poverty trap?," Ecological Economics, Elsevier, vol. 68(12), pages 3018-3025, October.
    3. Atallah, Shady S. & Gómez, Miguel I. & Jaramillo, Juliana, 2018. "A Bioeconomic Model of Ecosystem Services Provision: Coffee Berry Borer and Shade-grown Coffee in Colombia," Ecological Economics, Elsevier, vol. 144(C), pages 129-138.
    4. repec:bla:bstrat:v:27:y:2018:i:2:p:179-198 is not listed on IDEAS
    5. Wollni, Meike & Brümmer, Bernhard, 2012. "Productive efficiency of specialty and conventional coffee farmers in Costa Rica: Accounting for technological heterogeneity and self-selection," Food Policy, Elsevier, vol. 37(1), pages 67-76.
    6. Takahashi, Ryo & Todo, Yasuyuki & Funaki, Yukihiko, 2018. "How Can We Motivate Consumers to Purchase Certified Forest Coffee? Evidence From a Laboratory Randomized Experiment Using Eye-trackers," Ecological Economics, Elsevier, vol. 150(C), pages 107-121.
    7. Jezeer, Rosalien E. & Verweij, Pita A. & Santos, Maria J. & Boot, René G.A., 2017. "Shaded Coffee and Cocoa – Double Dividend for Biodiversity and Small-scale Farmers," Ecological Economics, Elsevier, vol. 140(C), pages 136-145.
    8. Ibanez, Marcela & Blackman, Allen, 2016. "Is Eco-Certification a Win–Win for Developing Country Agriculture? Organic Coffee Certification in Colombia," World Development, Elsevier, vol. 82(C), pages 14-27.
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