Socioeconomic Analysis of Factors Affecting Natural Resources Management in Agroforestry Industry

1. SOCIOECONOMIC ANALYSIS OF FACTORS THAT AFFECT NATURAL RESOURCES MANAGEMENT IN THE AGROFORESTRY INDUSTRY IN KWAZULU-NATAL AND THE EASTERN CAPE Socio-Economic Methodologies in Agroforestry Technology AdoptionBy: Mulatu F. ZerihunSupervisor: Professor ZelekeWorkuCo-Supervisor: Professor MammoMuchiePhD Workshop at Institute for Economic Research on Innovation (IERI)Tshwane University of TechnologyNovember 12, 2011 Pretoria, RSA NB: Part I of my presentation was on Conceptual Framework and Literature Review of my PhD Thesis. PART II-on Methodology……. Welcome!!! PhD Workshop IERI Nov.2011 PTA

2. Presentation Outline 1. Introduction2. Socioeconomic Methodologies in AF Technology Adoption2.1 Methodologies in Economic Analysis of AF2.2 Methodologies in Environmental Analysis of AF 2.3 Methodologies in Household Constraints and Adoption of AF 2.4 Methodologies in Macroeconomic and Institutional Analysis of AF3. Selected Methodologies in this Study and their Limitations4. Conclusions PhD Workshop IERI Nov.2011 PTA

3. 1. INTRODUCTION Market failure leads to natural resource degradation How?AF requires integrated research methodologiesWhy? Needs selection of appropriate socioeconomic methodologies Two types of studies on the analysis of AF innovations :a) Ex-ante -for the assessments of AF adoption potentials b) Ex-post studies-are post binary choice regression analysis (using probit or logit, models ) PhD Workshop IERI Nov.2011 PTA

4. Jeremy Holland (2007) defined social analysis as a generic term which encompasses institutional, political, and social analyses. • Institutional analysis looks at the “rules” that people develop to govern group behavior and interaction in political, economic, and social spheres of life. • Social analysis looks at the social relationships that govern interaction at different organizational levels, including households, communities, and social groups. • AF- provides a mix of market goods such as food, wood products, and fodder, and non-market goods and services including soil conservation, water and air quality improvement, biodiversity conservation, and scenic beauty (Alavalapati et.al, 2005)….thus worth comprehensive study PhD Workshop IERI Nov.2011 PTA

5. 2. Socioeconomic Methodologies in AF Technology Adoption2.1 Methodologies in Economic Analysis of AF -Assessing the profitability of AF under different setting- Cost –Benefit analysis (Franzel, 2005)-Profitability analysis by applying Land Expectation Value (LEV)-Faustman methodology-Profitability analysis-using Policy Analysis Matrix (PAM) ( Monke and Pearson, 1989)- Profitability analysis-using portfolio approach- to see how AF can help reduce risk and stabilize farmer’s income-Production function approach – Cobb –Douglas production function ( ICRAF,2004) PhD Workshop IERI Nov.2011 PTA

6. 2.2 Methodologies in Environmental Analysis of AF - Dynamic optimization ( Cacho and Hean, 2004)To estimate the optimal combination of trees and crops and rotation period to reduce the cost of land degradation and increase the benefits associated with carbon sequestration.- Household production model (Pattanayak and Depro)-Contingent valuation (CVM) by [Shresthaand Alavalapati, 2004]- WTA- to accept to adopt AF systems. PhD Workshop IERI Nov.2011 PTA

7. 2.3 Methodologies in Household Constraints and Adoption of AF To answer-How and why farmers make long-term land use decisions- Ex-post binary choice regression analysis (Pattanayak,2003) The general formulation of the model will be as follows:Where; ‘X’ is a continuous variable and ‘D’ is a dummy variable with three or more categories and ‘ß’ and‘d’ the respective estimated coefficients. PhD Workshop IERI Nov.2011 PTA

8. LP- models and simulation (Mudhara and Hildebrand, 2004)-To analyze the constraints inhibiting HHs from adopting AF-To determine ex- ante adoption potential-To assess various policies for promoting AF adoptionConjoint analysis (ACE) (Mercer and Snook, 2004)-To examine how farmers value a variety of attributes and combinations of attributes of different AFSs- based on quantifiable farmer preferences for alternatives PhD Workshop IERI Nov.2011 PTA

9. 2.4 Methodologies in Macroeconomic and Institutional Analysis of AFMacro level econometrics to quantify the impact of AF on agricultural productivity and rural development (Yin, 2004)- using agricultural production function of the following form: to assess AF from a regional and national perspectiveWhere; (Y= Aggregate production ) ( AR= agricultural reform (if any) (A= Land ) (CM= the ratio of crop to manufactured input prices to approximate market reform) (L= Labour ) ( ES= the measure of the environmental services provided by AF activities) (K= Capital ) ( Ds= cross –sectional dummies) (F= fertilizer ) (T=a time trend to capture the effects of other unidentified periodic factors) PhD Workshop IERI Nov.2011 PTA

10. 2.4 continued System level institutional analysis (Kant and Lehrer, 2004)-To develop a comprehensive and consistent institutional analysis of AFSs to inform effective [policy interventions ( see Conceptual Framework)-The most lacking methodological aspect of AF technology adoption is its institutional analysis to inform effective policy interventions. -Stakeholder analysis is one of the institutional analyses in natural resource management that has largely stemmed from concern that many projects have not met their stated objectives because of non-co-operation or even opposition from key stakeholders, who believed they would be adversely affected by change. PhD Workshop IERI Nov.2011 PTA

11. 3. Selected Methodologies in this Study and their Limitations I. LP- models and simulation following (Mudhara and Hildebrand, 2004) II. Conjoint analysis (ACE) following (Mercer and Snook, 2004) III. System level institutional analysis following (Kant and Lehrer, 2004) - Stakeholder analysis Challenges/Limitations- data and financial constraints4. Conclusions:there is a lack of integrated research methodologies for analysing Natural Resource Management practices like AF – thus this study contribute in this regard- in the two provinces of RSA Any question plz? Thank U PhD Workshop IERI Nov.2011 PTA