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Agroforestry Adoption: Keynes’ Animal Spirits are Alive and Well in the Yucatan

Agroforestry Adoption: Keynes’ Animal Spirits are Alive and Well in the Yucatan. James F. Casey Washington & Lee University Prepared for SAPPCREE Session Southern Economic Association Annual Meeting in New Orleans, LA November 21, 1999. CONTENTS OF THIS TALK.

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Agroforestry Adoption: Keynes’ Animal Spirits are Alive and Well in the Yucatan

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  1. Agroforestry Adoption:Keynes’ Animal Spirits are Alive and Well in the Yucatan James F. Casey Washington & Lee University Prepared for SAPPCREE Session Southern Economic Association Annual Meeting in New Orleans, LA November 21, 1999

  2. CONTENTS OF THIS TALK • Background / Motivation for the body of work • Objective of this paper • Keynes’ Theory of Investment • Model for Agroforestry Adoption • The Data • Model Specification • Results and Implications

  3. BACKGROUND / MOTIVATION • Agroforestry: emerging as a scientific discipline, emphasis on biophysical • In general: lack of socioeconomic research • (Mercer and Miller 1998) • Adoption rates are low

  4. Low Rates of Adoption?? • Natural Science is well understood • Insufficient Economic data • models for behavior (Ghadim and Pannell1999) • risk and uncertainty (Negatu and Parikh 1999) • non-market benefits • market failure (Casey, Caviglia, Kahn and Rivas 1999)

  5. OBJECTIVE • Develop a model based on Keynes’ notion of profit expectation and “weight” in order to more accurately predict farmer interest in agroforestry

  6. KEYNES’ THEORY OF INVESTMENT • Profit expectations and confidence • (Anderson & Goldsmith 1997) • Notions of “weight” • Precarious nature of Investment

  7. Keynes and Agroforestry • Uncertainty • Asking the farmer to invest • Profit forecast and “Weight” • Reducing Uncertainty • Investment in Human Capital

  8. Model for Agroforestry Adoption • Max U (A(ta), C(tc), M(*, taB)) • s.t. T - tc - ta = 0 • U(A(ta),C(tc),M(*, taB))> U(0,C(tc),M(*)) • Comparative Statics for B • dta/dB = (+) • dtc/dB = (-) • Investment = f(profit forecast, weight) • Weight = f(Human Capital Investment) • HC Investment = f(Ed, Exp, Trees, Part) • Invest AF = f(Human Capital Investment)

  9. Human Capital Investment • Education • Farming Experience • Experience with Trees • Comfort with Participation • Previous Success

  10. THE DATA • Calakmul, Campeche, Mexico, the CBR • 176 farmers interviewed • 15 communities • 142 expressed interest in Agroforestry

  11. Farmer Characteristics

  12. Model SpecificationLogit • Y = a + bSi + bHi + bR + e • S: Vector of socioeconomic variables • H: Human Capital variables • R: Rainfall strata

  13. MODEL RESULTS • Table 4. LOGIT MODEL: participation (1) or not (0) • Variables Coefficient Z – stat • TREES 1.29 2.08** • ED .634 1.81* • SURV .988 1.76* • EXP 1.26 1.6 • PART .378 0.82 • INC -.000029 1.9* • STRAT .661 1.43 • FARM .011 1.21 • Constant .104 .15 • Psuedo R2 = 0.156 Chi2 (8) = 25.98 N = 175 • * significant at .1 Correctly Classified 84.00% • ** significant at .05

  14. HC variables • Education (positive and significant) • Farming Experience(positive) • Experience with Trees (positive and significant) • Comfort with Participation (positive) • Previous Success (positive and significant)

  15. Conclusion and Policy Implications • Farmers with more human capital are more likely to participate. • Weight is important. Investment is precarious. • Education and Extension • Listen to farmers.

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