Bioeconomic modeling of alternative land uses for grassland areas and farmers' tree-growing decisions in Misamis Oriental, Philippines

Results of the bioeconomic analysis of the study showed that tree-based land use systems have significantly higher financial profitability and environmental benefits. The latter were measured in terms of higher carbon sequestration, least soil erosion, and sustained soil nutrients relative to current farmers practice of maize cropping. Despite these, extent of tree farming remains low (10% of land area). The Tobit regression analysis of farmers tree-growing decisions revealed that high relative price variability (timber price vis-a-vis cash crop prices) deters tree planting. The risk analysis conducted also indicated that while timber-based systems earned the highest net present value (NPV), they seemed to be the most risky options as reflected by the high coefficient of variation of the NPV ranging from 164% to 205%. The principal component analysis showed that smallholders have multi-objectives in tree growing, consisting of economic, recreation and aesthetic, and environmental protection and restoration. Of these, monetary and other economic-related objectives were found to be the primary consideration. Farmers tree-growing decisions depends on: (1) current price levels, forecast price changes and relative price variability; (2) socio-economic characteristics such as household size, age, and education; (3) farm characteristics given by cultivable land-man ratio, and farm size; (4) land tenure; (5) knowledge about tree-based land use systems; and (6) membership in landcare association. The study recommends that since price risk appears to be the major deterrent to expansion of tree farming, measures to reduce said risk or to improve risk management capability of farmers be analyzed. Provision of relevant and timely price information and price risk insurance are possibilities. It also suggests that payments to farmers for environmental services like carbon sequestration be explored to encourage expansion of tree-based land use systems