1. George W. Norton and Abigail Nguema Presented at the SANREM CRSP Annual Meeting Cincinnati, Ohio October 20, 2012

2. Objectives of CCRA-6 To identify: 1) Costs and benefits of CAPS 2) Optimal CAPS in target cropping systems, and optimal sequencing of CAPS elements 3) Broader economic and social impacts of wide-scale CAPS adoption 4) Policy changes to encourage CAPS adoption

3. Key Questions for Economic Analysis and Impact Assessment Are specific CAPS in specific countries profitable in the short run? If profitable, what are the optimal CAPS in each setting? What are the potential and actual economic, social, and environmental impacts of wide scale CAPS adoption? What are constraints to CAPS adoption? What is the adoption of CAPS over time in each country? What policy changes might encourage CAPS adoption, especially if the CAPS are beneficial in the long run but not profitable in the short run?

4. FY 2012 Activities Interacted with LTRAs to develop standardized data sets that will permit economic impact analyses of CAPS Economic analyses take place on LTRAs, with differing amounts of interaction with CCRA-6 Completed Linear programming analysis of optimal CAPs in Ecuador Projected aggregate benefits of CAPS using economic surplus analysis: LTRA-7 (Ecuador) LTRA-9 (Lesotho) LTRA-11 (Nepal)

5. I. Collaboration with LTRAs Contacted regional projects about their survey and economic impact assessment activities, and to summarize and compare available input cost and yield data Developed and distributed an enterprise budget form Worked on linear programming analysis with LTRAs in Ecuador, Nepal

6. II. Linear programming analysis LTRA-7 (Ecuador) (Nguema MS Thesis) Developed production coefficients and constraints based on: 2006 survey of 286 farms Expert interviews with agronomists, economists, and soil scientists Farmer surveys with 45 participants from the upper watershed and 43 from the lower watershed

7. Results: Illangama Watershed Optimal solution for typical farm household 1180 square meters of: (current practice: potatoes, fallow land, fava beans, fallow land rotation; conventional tillage; no deviation ditches; no cover crop) 1078 square meters of: (potatoes, oats-vetch, barley, fava beans rotation; conventional tillage; no deviation ditches; removal of cover crop) 864 square meters of: (potatoes, oats-vetch, barley, oats-vetch rotation; conventional tillage; no deviation ditches; incorporation of cover crop) Total of 3122 Square meters of crops per farm household

8. Results: Illangama Watershed Net revenue per farm: $2280 Deviation ditches not profitable Conventional tillage more profitable than reduced tillage

9. Results: Alumbre Watershed Optimal solution per farm household: 8,286 meters of corn, oats-vetch, beans, oats-vetch rotation; reduced tillage; manual weeding; removal of cover crop Net revenue per farm: $7700 Reduced tillage more profitable than conventional tillage Incorporation of cover crop not profitable

10. Conclusions SANREM treatments were included in the revenue- maximizing solution for both watershed models: New rotations Cover crops Reduced tillage Conservation agriculture practices have the potential to improve livelihoods of the rural poor in Ecuador Due to lack of data, a soil quality constraint was not included in the model, but can be in the future. SANREM research captures data on soil carbon content. Analysis would require soil quality data from the experimental treatments for at least three years to capture accumulated impacts on soil quality

11. III. Projecting Aggregate Benefits of CAPS through Economic Surplus Analysis Countries: Lesotho, Ecuador and Nepal Crops: maize, beans, potatoes, millet, and cowpeas Data required: Input cost and yield data from the regional projects Supply and demand elasticity estimates Price and quantity data Adoption rates (projecting benefits for 1%, 3%, 5% adoption) Research costs

12. D S0S0 S1S1 Price Quantity 0 P0P0 P1P1 d a b c I0I0 I1I1 Q0Q0 Q1Q1 Economic Surplus Analysis

13. Table 1. Basic assumptions in models to estimate economic benefits of conservation agriculture (CA) for maize in Lesotho ParameterCA 1 (Lekoti)CA 2 (No-till) Production (tons)128,213 Price per ton (US $)340 Percent yield change-21.4167.4 Percent cost change per ha.10.5-15.9 Maximum adoption rate (%) NA 5 Years to first adoption44 Years of benefits12 Probability of success (%)100 Elasticity of supply0.5 Elasticity of demand0.2 Discount rate (%)33

14. Ecuador: CA Treatments for Maize and Beans

15. Table 2. Basic assumptions in models to estimate economic benefits of conservation agriculture (CA) for maize in Ecuador ParameterCA 1CA 2CA 3CA 4 Production (tons)984,096 Price per ton (US $)710 Percent yield change1.781.822.262.13 Percent cost change per ha.0.0460.0810.0460.081 Maximum adoption rate (%)5555 Years to first adoption4444 Years of benefits12 Probability of success (%)100 Elasticity of supply0.8 Elasticity of demand0.6 Discount rate (%)3333

16. Table 3. Basic assumptions in models to estimate economic benefits of conservation agriculture (CA) for beans in Ecuador ParameterCA 1CA 2CA 3CA 4 Production (tons)70,000 Price per ton (US $)1037 Percent yield change00.2000.099 Percent cost change per ha.0000 Maximum adoption rate (%)5555 Years to first adoption4444 Years of benefits12 Probability of success (%)100 Elasticity of supply0.9 Elasticity of demand0.7 Discount rate (%)3333

17. Table 4. Basic assumptions in models to estimate economic benefits of conservation agriculture (CA) for potatoes in Ecuador ParameterCA 1CA 2CA 3 Production (tons)386,798 Price per ton (US $)243.40 Percent yield change0-0.15 Percent cost change per ha.1.82 0 Maximum adoption rate (%)NA Years to first adoption444 Years of benefits12 Probability of success (%)100 Elasticity of supply0.9 Elasticity of demand0.4 Discount rate (%)333

18. Table 5. Basic assumptions in models to estimate economic benefits of conservation agriculture (CA) for maize, millet, and cowpeas in Nepal ParameterCA 1 (Ma-C)CA 2 (Ma-Mi-C)CA 3 (Ma-Mi-C) Production (tons) 2,076,3962,379,087 Price per ton (US $) 332.56375.72 Percent yield gain -0.0100.028-0.095 Percent cost increase per ha. -0.2420.1590.061 Maximum adoption rate (%) 111 Years to first adoption 444 Years of benefits 12 Probability of success (%) 100 Elasticity of supply 0.4650.613 Elasticity of demand 0.730.743 Discount rate (%) 333

19. Results: Lesotho Positive economic benefits for No-till maize No benefit from Lekoti system No-till: Annual undiscounted benefit ranging from $1.489 million at 1% adoption to $7.517 million at 5% adoption rate Net present value of benefits minus costs over 12 years of adoption: $12.648 million (1% adoption) $29.769 million (3% maximum adoption) $37.902 million (5% maximum adoption)

20. Table 6. Projected economic benefits of conservation agriculture for maize in Lesotho (million $) CA 1 (Lekoti)CA 2 (No-till) Annual undiscounted benefit, 1% adoption 1.489 Annual undiscounted benefit, 3% adoption 4.489 Annual undiscounted benefit, 5% adoption 7.517 Net present value of benefits minus costs from initial research through 12 years after adoption begins, 1% maximum adoption 12.648 Net present value of benefits minus costs from initial research through 12 years after adoption begins, 3% maximum adoption 29.769 Net present value of benefits minus costs from initial research through 12 years after adoption begins, 5% maximum adoption 37.902

21. Results: Ecuador Positive economic benefits for all 4 CA treatments for maize Benefits for 2 of the 4 CA treatments for beans No benefits for potatoes

22. Economic Benefits: Maize in Ecuador CA Treatment 1 (manual weeding, conv. tillage, remove cover crop) Net present value (NPV) from $139.9 million (1% adoption) to $403.7 million (5% adoption) CA Treatment 2 (herbicide, conv. tillage, till in cover crop) NPV ranging from $142.5 million to $411.2 million CA Treatment 3 (manual weeding, reduced till., remove cover crop) NPV ranging from $178.8 million to $516.7 million CA Treatment 4 (herbicide, reduced tillage, till in cover crop) NPV ranging from $167.4 million to $483.6 million

23. Table 7. Projected economic benefits of conservation agriculture for maize in Ecuador (million $) CA 1CA 2CA 3CA4 Annual undiscounted benefit, 1% adoption 15.46315.74619.72618.479 Annual undiscounted benefit, 3% adoption 46.73747.60259.74455.935 Annual undiscounted benefit, 5% adoption 78.47779.940100.52094.055 Net present value of benefits minus costs from initial research through 12 years after adoption begins, 1% maximum adoption 139.937142.524178.772167.415 Net present value of benefits minus costs from initial research through 12 years after adoption begins, 3% maximum adoption 318.441324.342407.185381.201 Net present value of benefits minus costs from initial research through 12 years after adoption begins, 5% maximum adoption 403.673411.180516.679483.566

24. Economic Benefits: Beans in Ecuador CA Treatment 1 (manual weeding, conv. tillage, remove cover crop) No benefit CA Treatment 2 (herbicide, conv. tillage, till in cover crop) Net Present Value (NPV) from $0.55 million (1% adoption) to $3.3 million (5% adoption) CA Treatment 3 (manual weeding, reduced till., remove cover crop) No benefit CA Treatment 4 (herbicide, reduced tillage, till in cover crop) NPV ranging from -$0.19 million to $1.15 million

25. Table 8. Projected economic benefits of conservation agriculture for beans in Ecuador (million $) CA 1CA 2CA 3CA4 Annual undiscounted benefit, 1% adoption 00.16100.079 Annual undiscounted benefit, 3% adoption 00.48400.239 Annual undiscounted benefit, 5% adoption 00.80800.399 Net present value of benefits minus costs from initial research through 12 years after adoption begins, 1% maximum adoption -0.9160.554-0.916-0.189 Net present value of benefits minus costs from initial research through 12 years after adoption begins, 3% maximum adoption -0.9162.398-0.9160.724 Net present value of benefits minus costs from initial research through 12 years after adoption begins, 5% maximum adoption -0.9163.267-0.9161.153

26. Results: Nepal Positive economic benefits for CA treatment 1 (maize in season 1, cowpeas in season 2, with conventional tillage) No benefit for CA treatments 2 and 3 (maize in season 1, cowpeas/millet intercropped in season 2, with conventional or strip tillage) CA 1: Annual undiscounted benefit ranging from $1.5 million at 1% adoption to $7.7 million at 5% adoption rate Net present value of benefits minus costs over 12 years of adoption: $13.1 million (1% adoption) $30.7 million (3% maximum adoption) $39.0 million (5% maximum adoption)

27. Table 10. Projected economic benefits of conservation agriculture for maize, millet, and cowpeas in Nepal (million $) CA 1CA 2CA 3 Annual undiscounted benefit, 1% adoption 1.539-0.974-1.987 Annual undiscounted benefit, 3% adoption 4.623-- Annual undiscounted benefit, 5% adoption 7.709-- Net present value of benefits minus costs from initial research through 12 years after adoption begins, 1% maximum adoption 13.112-9.789-19.017 Net present value of benefits minus costs from initial research through 12 years after adoption begins, 3% maximum adoption 30.707-- Net present value of benefits minus costs from initial research through 12 years after adoption begins, 5% maximum adoption 38.996--

28. Conclusions Positive benefits from Conservation Agriculture in each region studied Results vary widely among treatments and crops: Some non-profitable economic outcomes, but for others: 10’s to 100’s of millions of $ of benefits over 12 years even with low levels of adoption Outcome of the analysis impacted significantly by assumptions on adoption rate; can only do “what-if’ scenarios at this stage

29. Future Research Economic surplus analysis of LTRAs Bolivia, Cambodia, Mali, Mozambique Others? Linear Programming analysis for additional LTRAs to determine optimal mix of CA treatments Policies that might encourage adoption of CAPS

30. Thank You

31. Aggregated Tableau