IDEAS home Printed from https://ideas.repec.org/a/eee/forpol/v56y2015icp48-56.html
   My bibliography  Save this article

Teak–cattle production tradeoffs for Panama Canal Watershed small scale producers

Author

Listed:
  • Stefanski, Stephanie F.
  • Shi, Xiangying
  • Hall, Jefferson S.
  • Hernandez, Andres
  • Fenichel, Eli P.

Abstract

Reforestation and forest conservation are important issues in the Panama Canal Watershed (PCW). Uncertainty remains about relative net benefits of profit-maximizing timber rotations compared to the net present value of incumbent land uses such as cattle ranching. The scientific and popular literatures have displayed enthusiasm for teak (Tectona grandis) and native species plantations. We estimate a realistic yield model for teak, an exotic tree species, based on growth data from actual small scale landholders who were incentivized to convert lands to teak plantations. We use a suite of well fit yield models to solve for the optimal Faustmann rotation and compute the net present value (NPV) of a teak plantation to a private land manager as a starting point for understanding land-use patterns. We compare the NPV from forestry to cattle and find that site characteristics, discount rates, and market prices are all important factors in influencing the land manager's decision to switch from cattle ranching to plantation forestry. We find that traditional cattle ranching is economically competitive, in terms of NPV, with and may often outperform teak plantations within the PCW. This result is robust to the teak yield model selected.

Suggested Citation

  • Stefanski, Stephanie F. & Shi, Xiangying & Hall, Jefferson S. & Hernandez, Andres & Fenichel, Eli P., 2015. "Teak–cattle production tradeoffs for Panama Canal Watershed small scale producers," Forest Policy and Economics, Elsevier, vol. 56(C), pages 48-56.
    • Handle: RePEc:eee:forpol:v:56:y:2015:i:c:p:48-56
    DOI: 10.1016/j.forpol.2015.04.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1389934115000611
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.forpol.2015.04.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jarvis, Lovell S, 1974. "Cattle as Capital Goods and Ranchers as Portfolio Managers: An Application to the Argentine Cattle Sector," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 489-520, May/June.
    2. Mason, Charles F. & Plantinga, Andrew J., 2013. "The additionality problem with offsets: Optimal contracts for carbon sequestration in forests," Journal of Environmental Economics and Management, Elsevier, vol. 66(1), pages 1-14.
    3. Coomes, Oliver T. & Grimard, Franque & Potvin, Catherin & Sima, Philip, 2008. "The fate of the tropical forest: Carbon or cattle?," Ecological Economics, Elsevier, vol. 65(2), pages 207-212, April.
    4. Cameron,A. Colin & Trivedi,Pravin K., 2005. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9780521848053, September.
    5. A. Colin Cameron & Pravin K. Trivedi, 2010. "Microeconometrics Using Stata, Revised Edition," Stata Press books, StataCorp LP, number musr, March.
    6. Conrad,Jon M., 2010. "Resource Economics," Cambridge Books, Cambridge University Press, number 9780521874953, September.
    7. Kaczan, David & Swallow, Brent M. & Adamowicz, W.L. (Vic), 2013. "Designing a payments for ecosystem services (PES) program to reduce deforestation in Tanzania: An assessment of payment approaches," Ecological Economics, Elsevier, vol. 95(C), pages 20-30.
    8. Ellen Wohl & Ana Barros & Nathaniel Brunsell & Nick A. Chappell & Michael Coe & Thomas Giambelluca & Steven Goldsmith & Russell Harmon & Jan M. H. Hendrickx & James Juvik & Jeffrey McDonnell & Fred Og, 2012. "The hydrology of the humid tropics," Nature Climate Change, Nature, vol. 2(9), pages 655-662, September.
    9. Virginia Dale & Sandra Brown & Magnolia Calderón & Arizmendis Montoya & Raúl Martínez, 2003. "Estimating baseline carbon emissions for the Eastern Panama Canal watershed," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 8(4), pages 323-348, December.
    10. Zimmerman, Frederick J. & Carter, Michael R., 2003. "Asset smoothing, consumption smoothing and the reproduction of inequality under risk and subsistence constraints," Journal of Development Economics, Elsevier, vol. 71(2), pages 233-260, August.
    11. Conrad,Jon M., 2010. "Resource Economics," Cambridge Books, Cambridge University Press, number 9780521697675, September.
    12. Esther W. Mezey & Jon M. Conrad, 2010. "Real Options in Resource Economics," Annual Review of Resource Economics, Annual Reviews, vol. 2(1), pages 33-52, October.
    13. Alix-Garcia, Jennifer & Wolff, Hendrik, 2014. "Payment for Ecosystem Services from Forests," IZA Discussion Papers 8179, Institute of Labor Economics (IZA).
    14. Jennifer Alix-Garcia & Hendrik Wolff, 2014. "Payment for Ecosystem Services from Forests," Annual Review of Resource Economics, Annual Reviews, vol. 6(1), pages 361-380, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Katherine Sinacore & Edwin H. García & Alex Finkral & Michiel Breugel & Omar R. Lopez & Carlos Espinosa & Andrea Miller & Theodore Howard & Jefferson S. Hall, 2023. "Mixed success for carbon payments and subsidies in support of forest restoration in the neotropics," Nature Communications, Nature, vol. 14(1), pages 1-13, December.
    2. Sanchez Badini, Olivia & Hajjar, Reem & Kozak, Robert, 2018. "Critical success factors for small and medium forest enterprises: A review," Forest Policy and Economics, Elsevier, vol. 94(C), pages 35-45.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Behringer, Stefan & Upmann, Thorsten, 2014. "Optimal harvesting of a spatial renewable resource," Journal of Economic Dynamics and Control, Elsevier, vol. 42(C), pages 105-120.
    2. Margaret Insley, 2013. "On the timing of non-renewable resource extraction with regime switching prices: an optimal stochastic control approach," Working Papers 1302, University of Waterloo, Department of Economics, revised Aug 2013.
    3. Hong, George William & Abe, Naoya, 2012. "Modeling and optimizing a sub-centralized LED lamps provision system for rural communities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(7), pages 4616-4628.
    4. Bauner, Christoph & Crago, Christine L., 2015. "Adoption of residential solar power under uncertainty: Implications for renewable energy incentives," Energy Policy, Elsevier, vol. 86(C), pages 27-35.
    5. Coordes, Renke, 2016. "Coordination of forest management through market and political institutions," Forest Policy and Economics, Elsevier, vol. 72(C), pages 66-77.
    6. Lima, Dmitry & Colson, Gregory & Karali, Berna & Guerrero, Bridget & Amosson, Stephen H. & Wetzstein, Michael, 2013. "A New Look at the Economic Evaluation of Wind Energy as an Alternative to Electric and Natural Gas-Powered Irrigation," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 45(4), pages 1-12, November.
    7. Kim, Youngho & Lichtenberg, Erik & Newburn, David A., 2024. "Payments and penalties in ecosystem services programs," Journal of Environmental Economics and Management, Elsevier, vol. 126(C).
    8. Castillo, Emilio, 2021. "The impacts of profit-based royalties on early-stage mineral exploration," Resources Policy, Elsevier, vol. 73(C).
    9. Sarah Wheeler & Dustin Garrick & Adam Loch & Henning Bjornlund, 2011. "Incorporating Temporary Trade with the Buy-Back of Water Entitlements inAustralia," Centre for Water Economics, Environment and Policy Papers 1101, Centre for Water Economics, Environment and Policy, Crawford School of Public Policy, The Australian National University.
    10. Speers, Ann E. & Besedin, Elena Y. & Palardy, James E. & Moore, Chris, 2016. "Impacts of climate change and ocean acidification on coral reef fisheries: An integrated ecological–economic model," Ecological Economics, Elsevier, vol. 128(C), pages 33-43.
    11. Kim, Youngho & Lichtenberg, Erik & Newburn, David, 2022. "Payments and Penalties in Ecosystem Services Programs," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322103, Agricultural and Applied Economics Association.
    12. Majah-Leah V. Ravago & James A. Roumasset, 2015. "Rethinking Baselines: An Efficiency-based Approash to Better REDD+ Governance," Working Papers 201515, University of Hawaii at Manoa, Department of Economics.
    13. Kasperski, Stephen, 2016. "Optimal multispecies harvesting in the presence of a nuisance species," Marine Policy, Elsevier, vol. 64(C), pages 55-63.
    14. Sims, Katharine R.E. & Alix-Garcia, Jennifer M., 2017. "Parks versus PES: Evaluating direct and incentive-based land conservation in Mexico," Journal of Environmental Economics and Management, Elsevier, vol. 86(C), pages 8-28.
    15. Massimo Filippini & Giuliano Masiero & Diego Medici, 2012. "The demand for school meals: an analysis of stated choices by Swiss households," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 1204, USI Università della Svizzera italiana.
    16. Montresor, Sandro & Francesco, Quatraro, 2015. "Do Key Enabling Technologies shape regional Smart Specialization Strategies? A patent based analysis of European data," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201517, University of Turin.
    17. Nicolas Quérou & Antoine Soubeyran & Raphael Soubeyran, 2015. "Moral hazard and capability," Working Papers hal-02795218, HAL.
    18. Delacote, Philippe & Robinson, Elizabeth J.Z. & Roussel, Sébastien, 2016. "Deforestation, leakage and avoided deforestation policies: A spatial analysis," Resource and Energy Economics, Elsevier, vol. 45(C), pages 192-210.
    19. William Collier & Matloob Piracha & Teresa Randazzo, 2018. "Remittances and return migration," Review of Development Economics, Wiley Blackwell, vol. 22(1), pages 174-202, February.
    20. Hitayezu, Patrick & Wale, Edilegnaw & Ortmann, Gerald, 2015. "Assessing Agricultural Land Use Change in the Midlands Region of KwaZulu-Natal, South Africa: Application of Mixed-Multinomial Logit," 2015 Conference, August 9-14, 2015, Milan, Italy 211736, International Association of Agricultural Economists.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:forpol:v:56:y:2015:i:c:p:48-56. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/forpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.