Economic Incentives for Entry and Exit in Gum Arabic Agroforestry System in Sudan Report as inadecuate




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The gum tree (Acacia senegal) in the Sahel-Sudan zone has many environmental benign functions. An important function is to control desertification. In this paper we analyze farmers' economic incentives to preserve the existing gum trees and their incentives to create new plantations using a real options approach. Results indicate that agricultural crops provide higher economic benefits as compared to gum agroforestry system. However, on the one hand, as gum arabic is produced during the dry period and land is abundant, there are low incentives for deforestation. Instead, farmers' tend to leave the land idle and let the tree growing. On the other hand, our results suggest that an increase in the prices of gum arabic of about 330 per cent is needed to induce entry and a shift in land use system from continuous agricultural production to gum agroforestry system.

Keywords: gum arabic ; deforestation ; entry and exit ; real options ; Sudan

Subject(s): Crop Production/Industries

Issue Date: 2006

Publication Type: Conference Paper/ Presentation

PURL Identifier: http://purl.umn.edu/25720

Total Pages: 16

JEL Codes: D4; N5; O13; Q12; Q23

Series Statement: Contributed Paper

Record appears in: International Association of Agricultural Economists (IAAE) > 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia





Author: Rahim, Afaf H. ; van Ierland, Ekko C. ; Wesseler, Justus

Source: http://ageconsearch.umn.edu/record/25720?ln=en



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