The results of this paper support the idea that increasing investment in farmers’ human capital, through formal education, formal training, or informal on-the-spot training, will increase the probability that they will implement agroforestry techniques. It is an interesting idea to use human capital as an indirect proxy of certainty, but it makes sense: the more educated on a subject someone is or the more experience with a technique an individual has had, the more aware they are of its success rate and pitfalls. Therefore, with increased knowledge comes the certainty of the decision to invest.
A large reason that certainty is such an important determinant in whether a farmer invests in agroforestry or not is that the benefits of agroforestry are not immediate. As the article notes, planting trees is labor-intensive, and tree planting may be a skill outside of the farmer’s normal comfort zone. Because of the delayed returns to investment, any imperfect information regarding the benefits may keep a farmer from investing altogether; the only way to ensure close to perfect information is for the farmer to be educated in the subject or have prior experience with the technique.
Results show that farmers interested in agroforestry have more experience planting trees, have a higher level of formal education, have more agricultural experience in general, and are more likely to have participated in similar programs in the past. This all suggests that increased human capital directly correlates with an individual’s probability of having current interest in agroforestry programs. Also, interested farmers tend to be younger, with lower incomes, and without children, which I thought was interesting, and attribute to having a higher willingness to experiment with relatively little to lose. I also wonder if there is a more direct connection between those willing to invest in education and those willing to invest in agroforestry, given their similarities in delayed returns and imperfect information in the present about future results; this could have to do with softer-skill qualities such as trust, determination, or personal confidence in success. In other words, I’m curious if the necessary level of certainty needed to invest in agroforestry
In this paper, the benefits of Agroforestry are apparent. There is also evidence that suggests as human capital increases, so will participation in agroforestry development programs. There is no doubt that the reasons for an increase these programs participation is caused by the advancement ion human capital, but what if the advancement in human capital is also slowing down the increase in participation of these programs. This paper doesn’t really address the “Free Rider” problem, which applies to this situation because all farmers benefit a little from any tree being planted anywhere, but an individual farmer benefits greatly from using all of his/her land to farm and letting all the other farmers plant trees. This problem starts when one farmer takes advantage of all the other farmers helping the system, but they contribute nothing. This doesn’t hurt the system very much when one farmer does it, but when more farmers start to take advantage of the system, then the program actually hurts the few farmers that are participating correctly. The free rider variable is holding these programs back. The solution to this problem could be to provide a government subside that allowed farmers to still turn a profit on the land that wasn’t being used for farming. This would provide equal incentives to every farmer to help prevent deforestation, while actually hurting the farmers who didn’t participate in agroforestry programs. This solution could reverse the free rider problem and greater improve the efficiency of the increases to human capital that cause these programs’ increase popularity to slow down.
This paper uses Keynes's argument that an individual's profit expectations and uncertainty determine investment decisions, which in the context of this paper refers to the adoption of agroforestry systems. While the explanation of the benefits of agroforestry provided by the paper make it seem as if the only rational decision for subsistence farmers is to switch from slash-and-burn agriculture to agroforestry, understanding the effects of uncertainty helps to put the decisions of the farmers in perspective. The paper illuminates several factors that contribute to uncertainty, one of which is education and prior experience. Theoretically, the higher an individual's education and experience the less uncertainty they have. Given this idea, I found it interesting that this study found that younger individuals tend to be the ones involved in agroforestry. I would generally associate experience with age which is why I found this result peculiar. However, when I consider this in terms of Keynes belief that "animal spirits" also play a role in the investment decision, it makes more sense. Keynes argued that some individuals are inherent risk takers and entrepreneurs and are more willing to make risky investments. With this in mind, I think it would make sense to assume that younger individuals who have not spent decades using the same slash-and-burn tactics would be more adventurous when it comes to trying new agricultural techniques. With this in consideration, perhaps public policy should focus their efforts on educating and providing information to the younger generation of farmers who are more likely to adopt agroforestry. I feel that the older farmers would be more willing to adopt the system if they had tangible evidence of its benefits instead of just research and data that says it works.
In attempting to explain why adoption rates of sustainable activities, specifically agroforestry, are low, this paper specifically and empirically demonstrates the idea we discussed in class on Tuesday of the relationship between productivity levels and rationality. It is a specific example of how the actions of rural farmers could incorrectly be viewed as irrational if one does not consider the high opportunity costs of attempting to alter productivity levels or practices. In class we discussed the fact that farmers would rather stick to what they know and have a solid year rather than attempt to change their practice to achieve higher output but risk having no yield at all. In this case, changing productivity is characterized by an investment in agroforestry while the idea of rational decision-making is discussed in terms of Keynesian ideas of profit expectation, uncertainty, and confidence. The paper notes that there are numerous benefits, both financial and non-financial, of agroforestry as compared to conventional, single output systems (monoculture). However, despite these benefits, there is a significant lack of adoption of this sustainable alternative. The paper hypothesizes that a reduction in the level of uncertainty that deters farmers from adopting these methods can be achieved through investment in human capital. In this way, the market failure we discussed in class of asymmetric information is addressed, and the gap between commonly accepted rational behavior and actual demonstrated behavior can be closed.
A key idea in the paper is the notion of “weight” being given to various pieces of information a farmer receives. As information is deemed relevant and thus given more weight, it becomes more of a guide to action. The way a piece of information is perceived, not necessarily just the information itself, will be the determination of investment decisions. Focusing in on this idea, the paper uses human capital as an indirect measure of uncertainty and, through regression analysis, shows that investment in human capital characteristics such as job training (both informal and formal) and formal education can lead to higher adoption rates of agroforestry systems. Again, in doing this analysis, the paper addresses the market failure of imperfect information and attempts to use this idea to explain the seemingly irrational low adoption rates.
This paper highlights the importance of sustainable farming techniques, specifically agroforestry. The benefits from agroforestry will not only be seen by the farmers as they will be better protected against drought while also keeping important nutrients in the soil, but will also serve as a positive externality to the rest of the world because deforestation will decrease. Since deforestation plays a huge role in global climate change, agroforestry implemented on a large scale should help to mitigate the consequences of this growing problem.
A big issue concerning the implementation of agroforestry is that a lot of the positive results from it will not be seen in the short run. As a result, the farmers may place a low weight on implementing this new practice and may see it more desirable to continue with slash and burn farming techniques. While increased education to these farmers is important to getting this new era of farming started, I think there is another way to get this project started quicker. If these governments could subsidize farmers for every tree that they planted, there could be more incentive for them to practice agroforestry. The subsidy would only need to be large enough to offset the difference in perceived income from practicing slash and burn to practicing agroforestry. As empirical evidence has shown, some farmers are already practicing the new technique and a majority of them are open to the idea. This leads me to believe that the subsidy would not need to be too large. Furthermore, as this project gets started, farmers will see the positive results and in turn will encourage other farmers to do the same. This snowball like effect would jumpstart this new farming practice to the point where it could be commonplace before not too long.
This paper highlights the importance of human capital and agriculture. With informal specific on-the-job training, formal training and formal education, farmers are more likely to adopt agroforestry. By using Keynes' notion of weight in decision making, the evidence shows that as human capital increases, the "weight" that farmers attach to agroforestry information is expected to increase, and thus their uncertainty about it decreases while the likelihood of program participation increases. This is because agroforestry is an investment decision to the farmer, and a farmer with more human capital is more likely to see the benefits of the investment and be more willing to invest. Support for that decision comes from the "weight" that they place on the agroforestry information, with weight being a function of one's human capital.
More education about agroforestry could lead to a greater participation of farmers in the practice. It's just that these farmer's are skeptical about it because the benefits of agroforestry are not immediate. Agroforestry contributes to species diversity, reforestation, reducing chemical agents, improving soil fertility and stability. Therefore it makes farming more sustainable than monoculture agricultural systems, i.e. slash and burn farming. These sustainability effects aren't immediately seen though, hence the uncertainty that comes with the investment. And uneducated farmers place little weight on the benefits of agroforestry because they know so little about it. Thus the greatest way to improve adoption of agroforestry is educating the farmers. This all is supported by Keynes' theory of investment, which really emphasizes the importance of human capital. The evidence shows that "a farmer with no tree planting experience, minimal education, and no exposure to an extension agent on agroforestry is very unlikely to place much weight on the evidence presented as to the benefits of agroforestry." Though through education and training, that "weight" should increase, and thus the probability of investment should increase as well.
The key takeaway I drew from this paper was that farmers with greater uncertain of outcome will be less likely to adopt agroforestry as a method of production; this is detrimental to both the farmer and the environment Agroforestry offers both financial and nonfinancial benefits such as better use of available land, reduction in time between cash flows and the sharing of costly resources as well as better preservation of environmental quality. However, poor farmers have proven skeptical and slow to adopt agroforestry practices, if they adopt them at all. Casey uses Keynes model to account for what would otherwise seem like irrational decision-making. Under Keynes theory farmers are still acting rationally, they just suffer from insufficient information and a lack of confidence about the future. This is completely logical, subsistence farmers cannot afford any variation or uncertainly in their production because they depend on their products to survive. The paper clearly shows that human capital matters in a farmer’s decision to adopt agroforestry; the farmer must have an understanding of the practices in order to properly implement them and he must have confidence in his agricultural skills. Because confidence cannot be directly taught, the policy prescription from this paper would advocate for agricultural education to increase farmer’s knowledge or production methods.
This paper by our very own Prof Casey demonstrates just another example of the problem of asymmetric information in the developing world. The uncertainty factor adds another level of nuance, since information a farmer doesn’t trust does him just as much good as no information at all. There’s also a measure of hope though, since once one farmer is educated and knowledgeable about new farming technology or techniques, he can pass that information along to his fellow farmers. Furthermore, he will probably be a more trusted source than an outside agent.
With this in mind, we can envision an aid system where outside agents train the most highly educated individuals (the ones most likely to adopt new technology) in a community. It is then the responsibility of these early adopters to use the new technology and thereby demonstrate by example that it yields higher returns. I feel that actually seeing agroforestry work for one of your neighbors takes away the uncertainty about its value. Then the issue left is training the additional farmers in the village who are ready to now adopt the technology. Either the outside agents could return a year or two later for further training, or the early adopters could train their fellow farmers. Since the early adopter would have to give of his time to train others, this behavior should be incentivized. Maybe for every day he sacrifices farming to train others the household will receive a certain amount of seed, food, or farming equipment.
Of course, raising the base level of education (i.e. human capital) in the community would ensure that more households would adopt agroforestry after seeing it work for their neighbors. Plus, education increased human capability and is therefore good in and of itself.
Jim Casey’s article on Agroforestry in Mexico is interesting in revealing the myriad of benefits derived from agroforestry practices in under developed, agricultural settings. However, I found the article to be the strongest evidence yet of the role that education (or lack thereof) plays in the cyclical nature of poverty.
Farmers who choose often choose not to adopt agroforestry practices are often those with low levels of human capital. Thus, there is little knowledge about the actual ecological process of planting trees in such communities. Casey is careful to note that while farmers may have information about the potential benefits of such practices, this external information combined with any (limited) intrinsic foresight of the farmers, does not engender the necessary confidence to implement such practices. In the language of Keynes, the do not attach enough “weight”.
Federal and local government agencies might be inclined to provide increased farm subsidies to such farmers. However, I recommend such institutions mandate youths to attend specialized, agricultural programs. Youths can learn about the process of agroforestry practices that can increase species diversity, serve as a natural fertilizer and improve soil fertility; when these youths graduate, they will have the confidence (weight) to implement these practices- ultimately creating a more efficient agricultural sector. Mandating youths to education, similar to planting trees, is initially capital intensive (in the form of lost labor) with benefits not materializing until many years later. However, both yield results that will trump any preliminary inconveniences.
James Casey’s “Agroforestry Adoption in Mexico: Using Keynes to Better Understand Farmer Decision-Making” uses Keynes’s model of investment determination to explain the low adoption rates of agroforestry. The low adoption rate of agroforestry is initially puzzling because of its financial and nonfinancial benefits. According to Casey, “Some of the sources for the increased financial benefits are (1) more intensive use of the available land, (2) reduction in time between cash flows, and (3) sharing of costly resources, such as fertilizer and herbicides between multiple outputs” (Casey 506). In addition, “Agroforestry…may contribute to (1) increasing species diversity, (2) reforestation, (3) reducing the use of chemical agents on the farm, and (4) improving soil fertility and stability, hence making a claim to being more sustainable than traditional monoculture agricultural systems” (506-507).
Despite the numerous benefits of agroforestry, many farmers fail to adopt this method of farming. Casey acknowledges this when he says, “Studies…show higher net present values (NPVs) for agroforestry systems than for monoculture systems, yet farmers in developing countries show low rates of adoption” (507-508). Casey uses Keynes’s theory of investment to reason through this decision not to adopt agroforestry. According to Keynes’s theory of investment, “When decision-makers are uncertain, they attach a low ‘weight’ to their forecast” (508). By Casey’s extension of the theory, “It is possible that farmers with greater amounts of human capital are better equipped to make the adjustments needed to successfully implement an agroforestry production system” (508). As a result, increased human capital and confidence are key factors to increasing agroforestry. The reasons Casey gives for this are, “First, the farmer must have a minimal understanding in order to interpret the information presented by the agroforestry practitioner or extension agent. Second, the farmer must have confidence in his or her own skills and experiences in order to handle the planting, caring of, and eventual harvesting of the trees” (517).
In this paper, the question of human capital comes into play in whether higher levels of human capital increase the likelihood to adopt agroforestry programs. It looks specifically at empirical evidence in Campeche, Mexico, where adoption rates of agroforestry programs are low. Most farmers in Campeche use “slash-and-burn” agriculture, which essentially destroys the nutrient cycle in tropic regions by neglecting trees. This type of farming is popular despite the variety of both financial and nonfinancial benefits that participation in such programs entails for farmers. It is surprising then that agroforestry programs that can provide net economic and ecological benefits are not being adopted by all or at least a large percentage of farmers. Is their behavior irrational? As we’ve seen in many similar examples in class, this behavior is not, in fact, irrational. In the context of such an impoverished society, it is essential to understand the role of risk and uncertainty in such an issue. Farmers cannot simply calculate the net present value of investing in agroforestry. They must obtain a certain level of confidence about the accuracy of the information they receive on the profitability of agroforestry. Using Keynes’s model of investment, the paper takes this into account and offers a theoretical explanation for low adoption rates. This model suggests that a farmer that is more confident in interpreting information will place more “weight” on a forecast and be more likely to invest. In this particular case, farmers with higher human capital would be expected to put more weight on their forecast and, therefore, adopt the agroforestry program. They would hypothetically be better able to understand and interpret the information presented by an agroforestry practitioner, as well as have confidence in personal skill sets needed to handle such a program. Empirical evidence supports this hypothesis, showing that farmers with more human capital are better able to adjust properly and be successful in implementing an agroforestry program.
This paper offers valuable insight into both the extensive benefits of human capital development as well as the role of confidence in economic and investment decisions. Farmers with greater certainty in the returns on their investment in agroforestry are more likely to take that step, and human capital development is a crucial step for them to gain that certainty. As Casey states in the conclusion, "The empirical results lead to the conclusion that investment in human capital, by subsistence farmers in southeastern Mexico, does lead to a higher profitability of adoption / investment in agroforestry." Within this broad category of human capital development, on-the-job training, formal training, and formal education all play significant roles.
Keynes' idea of 'weight' in a decision provides a framework that can be used to analyze the specific effect of human capital development. The 'weight' model offers two valuable benefits: it explains why farmers can be advised to do something but not do it and it articulates the steps — or at least the formula — necessary to make such advice more valuable and efficacious. Casey writes that farmers "may place very little 'weight' on this profit forecast made by the agrofoestry practitioner, due to the lack fo relevant information they possess about agroforestry." Consider the example of any generic farmer in a rural village in Mexico. He may read flyers or articles on the benefits of agroforestry, but he could reasonably believe that similar success for him would be unlikely. But if a training program in agroforestry took him to a nearby village where he could see the success firsthand and learn best practices, he will be much more likely to implement such measures himself. This type of training program offers just one possibility of many, but it is certainly a valuable understanding nonetheless.
Using Keynes' investment model, this paper argues that investment in agroforestry depends on the level of human capital for each individual. According to the theory, a person with more human capital is more likely to give weight to the investment ideas presented in something like agroforestry. They are better equipped to realize the long term benefits of present investment. This level of human capital can come from on-the-job experience (i.e. more farming experience), better access to information, or even more formal education.
This idea sounds great, just increase the rural education levels and/or have agroforestry training programs. This will increase relevant human capital, leading to more "weight" being placed on the theory and decreased uncertainty in the investment. This should increase uptake rates. However... there are many confounding problems such as access to credit and insurance in order to smooth over the initial costs of the investment and potentially lower output at the start of the investment. It is nice to blame low uptake on uncertainty, when following Keynes' investment model. Yet, based on the explanation of the investment model in the paper, this model does not seem up to par for current rural, development economics. Yes, uncertainty and therefore human capital plays an important, even critical, role, however it seems that the model is too simple and does not account for the many other factors that go into these farmers' decision making process.
This paper looks at variation in the adoption of sustainable agricultural practices in the form of agroforestry. Adoption rates are extremely low in much of the developing world for an agricultural technique that can lead to higher soil fertility and more output, and overall offers many economic and social benefits. This is a good example of how the poor in the developing world do not fit into our models; at least in the way we generally understand them for rational decision makers in the developed world. Based on our knowledge and models, investments in agroforestry seem like an easy choice, but for some reason many farmers to not invest. Professor Casey creates a new way of thinking about this choice from a different model that addresses how much “weight” farmers give to information about investment choices. In this theoretical model, farmers with lower human capital and less experience with planting trees would not give information about agroforestry as much weight, and would thus be less willing to undertake the time needed to invest in agroforestry. Using data from the Campeche state in Mexico, Professor Casey finds this to be the case.
This touches on themes discussed in class Tuesday and throughout the term and highlights the importance of asymmetric information in developing countries. As is the case for education, it is important to simply educate the poor about the returns to investing in new techniques. This paper is also a good lesson in some of the themes from the very beginning of the term. It shows a different way of taking economic theory to explain the decision making process of farmers in developing countries that previously seemed irrational. Even in situations that don’t make much sense from a purely economic sense, economics still can provide other frameworks to view the problems of development.
This paper offers evidence on the impact of human capital on agroforestry in the Yucatan, and offers evidence against the common notion that poor families do not take advantage of opportunities that would make them more productive. However, as we mentioned in class, that is the result of several market failures and unequal access to knowledge or resources. In Mexico, specifically, Casey looks at the reason farmers are not adopting the clearly beneficial agroforestry techniques. He connects this to Keynes' ideas of decision making, certainty, and "weight". Without information and education about the specific agroforestry technique, farmers aren't going to place much weight on the long-run forecast that they are presented with. Uncertainty is a very important variable in these cases, because there is more at stake than excess capital. Rather, it is often the life and well-being of an entire family. There isn't room to make risky decisions. However, Casey discusses how an investment in human capital can lead to farmers understanding the agroforestry process, and with a solid knowledge they place greater weight on the outcomes and are much more likely to adopt this beneficial process. This has far-reaching policy implications, because education about a variety of topics could prove to be beneficial in areas beyond farming. This paper provides empirical evidence that it isn't laziness or unwillingness to try new technologies that limits poor farmers from becoming more productive, but rather they are acting in a rational manner to minimize risk. Knowledge about human capital benefits to investment should shape our policies so education and training programs can increase adaptation of new technologies and techniques for farmers in low-income and subsistence farming areas.
For farmers the quality and quantity of their output is reliant on their input. The lack of modern technology in low-income countries contributes to the continual use of traditional farming methods. This paper gives an interesting insight of the struggles that modern farmers face. Specifically, the paper focuses on agroforestry, a practice of farming that integrates trees into an existing farming system. This is in contrast to slash-and-burn agriculture, the process of burning areas of forest to plant new crops. There are more benefits noted that are obtained when farmers use agroforestry. However, this paper also highlights the uncertainty that agroforestry gives farmers. This uncertainty is noted as “weight” in Keynes terms. Factors that affect this uncertainty include the notion that agroforestry requires human capital, knowledge of the process and time, given that returns are not immediate. For many farmers these factors are enough for them to deter from this new farming technique. Some simply cannot afford to undertake this new undertaking if there is a possibility of failure. Table 3 from the data shows that those farmers who are interested in agroforestry are younger and have fewer children. These interested farmers with fewer children may take more risks because they have less of a financial burden than those with more children. It is also beneficial that these interested farmers are younger because they can pass on their training and knowledge of agroforestry to younger generations. Agroforestry may prove to be one way out of the trap that is the cyclical nature of poverty.
In his paper "Agroforestry adoption in Mexico: using Keynes to better understand farmer decision making", Jim Casey questions the impact that a reduction in uncertainty due to increased investment in human capital has on agroforestry participation.
The author finds intriguing that despite the realized benefits of agroforestry, people in the Yucatan do not implement agroforestry. Motivated by this interesting fact, Jim Casey builds a microeconomic model that studies the impact that increased human capital might have agroforestry. However, the author places emphasis on the 'weight' of the decision the farmer makes. This new variable comes from Keynesian theory and it depicts the animal spirits that tend to drive investment in the long run.
The results that he finds support his hypothesis and that if there is increased human capital among farmers, they will place higher 'weight' on their decision to invest. As a result, Yucatan farmers will transition from traditional "slash and burn" agriculture to agroforestry. In addition , one interesting finding from this paper is that contrary to regular expectations, those one with a lower income tend to transition from traditional agriculture toward agroforestry.
Finally, I was wondering whether there might be reverse causality among agroforestry and education I human capital.
This article in combination with our discussion today obliterates the idea that farmers are irrational players in the agriculture game. Although it may be beneficial for farmers to invest in long-term investments it is irrational given the state that many farmers find themselves in. Farmers are often risk averse because of their sensitive situation. Farmers are not in a market with perfect information and there are often coordination failures that do not allow farmers to fully understand the potential benefits of investment. Farmers are often afraid that investment can be risky, they cannot afford to be concerned with the “mean” they must concern themselves with the inevitable down-years. Farmers are risk averse and side with the safe/familiar option even when there could be huge benefits coinciding with investment.
The article discusses the issue of agroforestry. Agroforestry is essentially the idea of having trees in an area of farmland. This has many benefits including: more fertile, less deforestation, and a more diverse eco-system. Furthermore, the traditional act of cutting or burning down trees is harmful to the farmland. Thus, agroforestry is an affective but modern policy that has been met with concern from the traditionalist farmers who are risk aversive.
145 of the 175 farmers surveyed said they’re interested in agro-forestry but only a small percentage are actually practicing the technique. Of the people that are using agroforestry they are young and well educated with fewer children. Younger people are likely to be more open to change and willing to not be afraid of modern technology. Better education is the key, because better educated people are likely to be more confident in, not only their abilities but also the positive effects of agroforestry. This education will give agroforestry more “weight” when considered by farmers.
In conclusion the key is to educate people about the benefits while offering them some sort of security. This security could be access to credit or insurance. It is crucial that farmers know that this investment will not leave them starving and without income.
The article attempts to understand how the decision whether or not to use agroforestry is made by small-scale, nearly subsistence level farmers in Mexico. The two inter-related key concepts are Keynesian weight and uncertainty. The hypothesis is that farmers who are more confident in their ability to understand the agroforestry program are able to place greater weight in the projections so improved yields, diversified income streams, and higher soil quality. The more confidence a farmer has in those projections the easier it is to overcome the uncertainty of the required investment, need to learn new skills, and changing from established ways of farming. Through a survey of 175 farmers, the predictions this hypothesis makes seem to generally hold true. Farmers with higher human capital, formal education or prior experience with agroforestry were more likely to adopt agroforestry. The only expectation that was not met and also went largely unexplain was why those who had adopted agroforestry had lower incomes, which would seem to have a potential impact on other adopting it. Because if a farmer who has not adopted agroforestry is looking at his better educated more experience neighbor who has adopted agroforestry but is not making less money than he/she is, this seems to add to the uncertainty of the potential benefits. This was a particularly interesting way to examine why farmers may not make investments in new agricultural methods. On Tuesday we developed the explanation that while the new methods offer potentially higher yields, there is also greater variability in those yields so farmers would opt for the lower level more secure yield. This though is different in examining how a farmer may discount a prediction made on the benefits of new crops based on her/his ability to understand the basis for the projection. For example if the projected benefit may be valued at 4 and the potential cost is 3, then it would seem the farmer should adopt the change, but if they are only partially, say 50% confident in their understanding in the prediction, the perceived benefits may only be valued at 2 and the cost at 3 leading the farmer to not adopt the new method. This analysis seems useful in a wide range of applications and provides a better understanding into decision making than assuming rational actors with perfect information.
Focusing on the decision by farmers in the Yucatan to abstain from engaging in agroforestry, this paper by Casey addresses a more fundamental economic question - why, at various times and in a multitude of situations, people don't make the rational choice economics would lead us to believe they should. Casey explains a theory put forward by Keynes; when people weigh an argument or philosophy, they give more "weight" to something they have more information and certainty towards a positive end goal. This translates into his hypothesis, that farmers who have more knowledge and are confident in the ability of agroforestry to yield benefits will be more likely to adapt this method of farming. Reading this paper was remarkably refreshing, especially after reading and discussing so many different examples where people don't act in the most rational way, and finally having a potential answer posed. Keynes argument made sense in this context, and Casey's hypothesis seemed to have found a positive correlation between increased human capital (knowledge and understanding) and an adoption of agroforestry by farmers.
The one point that really resonated with me while reading this article was Casey's emphasis on confidence among farmers' perception of their ability to care for any trees they planted. It seems that so often in economics, people are held as 'equal' in intellectual, physical, and mental capacities, and yet the argument that confidence could affect the decision process makes perfect sense. Overall, this article not only addressed an interesting subject in the discussion of the benefits of agroforestry, but it also broadened the traditional ideas of economics in taking into consideration some of the more 'human' traits that go into the decision making process.
It is obvious that the rational decision for an individual farmer in a tropical area, considering future gain, is to invest in agroforestry. However, like all things related to economic development, it is never this simple. When considering ways to inspire growth in such a detrimental sector of the economy, it is important to consider ways to incentivize those involved. One must consider the benefits and constrains in both the short and longer term and analyze the decision patterns and attitudes of the farmer.
It is simply not productive to practice monoculture production in a tropical environment. Agro forestry will increase productivity, reduce slash and burn, promote healthy soil and, in the long, run allow for an increase in a farmer’s profitability. However there are many constraints, the greatest being that Agroforesty has a high initial cost with a hope for future gain. This is a hard concept for sustenance farmers to favor. Farmers require a greater initial benefit to provide a bit of insurance for such a large investment
Based on the empirical evidence, I believe that the best way to incentivize these farmers is to educate them. It seems to be the most effective way to convince a sustenance group that there is gain to be had at a time other than the present. I think it is important for the government or an NGO to promote a plan to invest in human capital to promote agroforestry. This could develop the agricultural sector of developing countries in a way that would rapidly induce growth for the country as a whole.
“Agroforestry adoption in Mexico” looks at farmers’ uncertainty and their likelihood of participating in an agroforestry development process. The individual’s expected benefits varies heavily upon his own human capital because of the value (“weight”) he places upon investment. Casey’s empirical evidence shows that those with more human capital are more likely to adopt an agroforestry implementation. This is consistent with complementary research and encourages the elucidation of farmers in the benefits of agroforestry, a major component of which would be the ability to understand the adoption program. While Casey’s paper highlights agroforestry in the tropical region of Campeche, Mexico, one wonders if tree farming would yield the same benefits elsewhere in the world, not only in the sub-regions of Latin America. The importance of extending this work to the rest of the world becomes evident when one looks at the benefits to the farmer as well as his whole community. Historically, implementers of agroforestry report economic as well as ecological gains because of attention to trees. Firstly, agroforestry leads to a more effective cultivation of the farm land. Agroforestry also increases the frequency of cash flows and spreads the cost of fertilizer and herbicides over multiple products. The assessment of these three economic returns would start with the effective cultivation of the land and the translation to more nutrient rich crops if not a greater yield of crops and the future benefit of selling the lumber from the trees. Apparently planting trees allows the crops to grow faster and thus the turnover to increase and payments to be received more often. Finally, fertilizer and herbicides must now be spread over the crops as well as the trees. An important element that one might question is the results of studies that examine the benefits of agroforestry both short term and long term matched with the cost of such investments. Another interesting question might be the most effective way to implement an agroforestry system.
The structure of this paper is interesting, whether or not it was intentional. The conclusion is that greater human capital decreases the uncertainty associated with agroforestry because farmers place more "weight" to information, which increases the likelihood that they will participate in such a program. The increase in human capital means that farmers now have sufficient understanding of agroforestry, at least to understand the relevant information that they are given by a "agroforestry practitioner or extension agent." Also, they have greater confidence (thus, less uncertainty) in their skills and experiences to sustain this long-term investment. The key is knowledge, or as specified in the article, relevant knowledge that has the effect on uncertainty. (It can be generalized that uncertainty arises from a lack of knowledge, in a situation when the obvious rational action is to invest.) I mention the structure of the paper because for the first page and a half, I had no clue what agroforestry was and indeed, I did not know why someone should adopt it. I did not connect deforestation with increased agricultural output. I only understood the concept when I read, "simply put, agroforestry entails planting trees on farms." I can imagine that farmers may think that agroforestry seems counterintuitive to production growth since planting more trees occupies valuable land, in area and in nutrients. They burn down trees to replenish the soil, to plant more seems to be against the known and practiced strategy. An interesting use of the trees is to serve as an indication of boundaries around a property. This could complement land reform policies because it serves as another tool for property rights, which will increase certainty and confidence to motivate a farmer to be more efficient.
Like many problems and potential solutions that we have learned about, failure to adopt these strategies is a classic example of the chicken and egg problem. Farmers will not invest in agroforestry if they do not know or are uncertain about the benefits because they cannot see the physical evidence. There is no physical evidence to appease the concern if the farmers do not engage in the practice. So what happens? Government? NGO's? And once more, it will depend on the region and the specific social, political, cultural, economic, environmental factors.
*I am curious to know how many of the farmers start to practice agroforestry on their farms after they were given the survey because of that little exposure to information.
“Agroforestry Adoption in Mexico” by James Casey discusses the decision making process of adoption agroforestry or continuing traditional farming methods like slash-and-burn agriculture. Understanding this rationale is important because agroforestry reduces deforestation. This is an environmental practice that many people do not implement.
Agroforestry is the planting of trees on farms. This sustainable practice more adequately uses the available land, reduces time between cash collections, and spreads fixed costs of resources like fertilizer and herbicides among more outputs. Also, this farming strategy increases species diversity, reforestation, reduces the use of chemical agents, and improves fertility and stability. When slash-and-burn agriculture is practiced the trees are eliminated and so is the nutrient soil. Also, farmers without trees will experience soil erosion from rainfall. At first glance, agroforestry seems like the easy choice for preferred agriculture practice. Casey asks why people do not choose these apparent benefits. This is a topic we have discussed many times, like in the “The Economic Lives of the Poor” when the farmers did not purchase fertilizer for their land even though it can increase returns.
After interviewing 175 farmers in Mexico, Casey concludes that a person with higher human capital is more likely to use an agroforestry program. According to Keynes, the more weight of evidence a person places on a forecast, the more confident he will be in that forecast. However, if the person cannot understand the information or is not confident in his interpretation of the information, he will place little weight. Agroforestry is risky to many farmers because it requires new skills, time and the returns are delayed. Farmers with greater human capital can better use technology and interpret information.
While I was in Nicaragua, I visited a farm that practiced agroforestry. The farm had multiple outputs, was lush with diversity, and was ultimately successful. The farmer was better educated than other farmers I visited. He learned about fertilizer and recycling in order to better his farm. I also visited a farm that practiced slash-and- burn agriculture. The farm was dry and flat. Also, it had low yields and only produced one product at a time. Investment in human capital would change the landscape of Mexico and Nicaragua for the better.
This paper highlights some of the pitfalls of poverty that we have discussed throughout the year. Casey successfully shows that failures to invest in agroforestry among subsistence farmers in southeastern Mexico are related to a lack of human capital. Agroforestry is an extremely important farming technique because it is a sustainable practice that maintains crop production while simultaneously replenishing the soil. However, a majority of the farmers in this area use slash and burn agriculture, a technique that destroys trees which happen to be the most essential part in the tropical nutrient cycle. Agroforestry provides a solution to this problem by not only solving the deforestation problem but by providing a farming technique that produces a higher yield at a more sustainable rate.
The problem that Jim Casey presents is that there is a high degree of uncertainty and risk for these farmers in switching from their traditional farming techniques that are in fact harmful to them to agroforestry which can benefit their farming and their lives in many ways. Casey points out that if a poor forecast is perceived in investing in agroforestry then the farmers are much less likely to adopt the practice. Often times these farmers view agroforestry poorly because they simply have little information about how to utilize the practice or the future benefits of switching to agroforestry. Furthermore, just as we saw in the rationale for maintaining child labor among the poor, these farmers returns from agroforestry are in the long term and thus they opt for the slash and burn method that will provide them with immediate and income.
Casey points to a number of ways that we can increase human capital among these farmers and thus increase the use of agroforestry. Among these are informal specific on-the-job training, formal training, and formal education. Through his empirical analysis Casey is able to identify seemingly obvious solutions to a major problem in this area. Casey once again reminds us that the poor are rationale actors seeking to maximize their utility just like everyone else and that me must not jump to conclusions about poor's seemingly backwards choices.
In this paper, Casey highlights the level of human capital of farmers as hugely important in the adoption of innovative agricultural practices. Economists may be tempted to say that since farmers are rational actors, they will automatically adopt the practice that yields the most profit, but that is certainly not the case. Casey offers a good explanation of this conundrum with Keynes' theory of investment decisions in relation to human capital. His study shows that farmers who are more educated and more experienced in planting trees are more likely to invest in agroforesty, which is consistent with his hypothesis. This paper effectively demonstrates the value of investment in human capital, such as education, for the economic development of impoverished rural areas.
Agroforestry provides a possible opportunity to dramatically increase the productivity of agriculture in developing countries. With this information, why haven’t more farmers adopted this method? Why have they kept using slash and burn farming, which affects the other uses of the land and requires a dormant period where the land needs to replenish the nutrients? This study investigates whether or not human capital has a role in the adoption of agroforestry. Using Keyne’s model, with the famous saying “investment is a flighty bird,” Casey explains that investments are risky and having information and confidence in the investment is key. Part of this article reminds me of what we read in last week’s child labor piece. Agroforestry is different than the historical ways of farming and also has long-term returns, much like child education. Therefore, with the findings of this article, we now know that educating farmers and giving them confidence in agroforestry will increase the likelihood that they will adopt this method.
In my microeconomics class we have been discussing how that the government should invest every dollar that has a real marginal value no less than a dollar. I would think that the returns to the state would be large for an investment in Agroforestry as it would lead to long term reduced costs to the state in the form of subsidies to farmers as well as increase farmers incomes to taxable levels (higher taxes if they are already paying taxes). It would make the most sense for governments to run a program sort of like a big push to move all farmers to agroforestry. While I'm sure such an investment would be expensive I believe that eventual returns both economically and socially would easily outweigh the initial cost. This is not the type of thing that the government should try to incentivize, but should take responsibility for.
The results of this paper support the idea that increasing investment in farmers’ human capital, through formal education, formal training, or informal on-the-spot training, will increase the probability that they will implement agroforestry techniques. It is an interesting idea to use human capital as an indirect proxy of certainty, but it makes sense: the more educated on a subject someone is or the more experience with a technique an individual has had, the more aware they are of its success rate and pitfalls. Therefore, with increased knowledge comes the certainty of the decision to invest.
ReplyDeleteA large reason that certainty is such an important determinant in whether a farmer invests in agroforestry or not is that the benefits of agroforestry are not immediate. As the article notes, planting trees is labor-intensive, and tree planting may be a skill outside of the farmer’s normal comfort zone. Because of the delayed returns to investment, any imperfect information regarding the benefits may keep a farmer from investing altogether; the only way to ensure close to perfect information is for the farmer to be educated in the subject or have prior experience with the technique.
Results show that farmers interested in agroforestry have more experience planting trees, have a higher level of formal education, have more agricultural experience in general, and are more likely to have participated in similar programs in the past. This all suggests that increased human capital directly correlates with an individual’s probability of having current interest in agroforestry programs. Also, interested farmers tend to be younger, with lower incomes, and without children, which I thought was interesting, and attribute to having a higher willingness to experiment with relatively little to lose. I also wonder if there is a more direct connection between those willing to invest in education and those willing to invest in agroforestry, given their similarities in delayed returns and imperfect information in the present about future results; this could have to do with softer-skill qualities such as trust, determination, or personal confidence in success. In other words, I’m curious if the necessary level of certainty needed to invest in agroforestry
In this paper, the benefits of Agroforestry are apparent. There is also evidence that suggests as human capital increases, so will participation in agroforestry development programs. There is no doubt that the reasons for an increase these programs participation is caused by the advancement ion human capital, but what if the advancement in human capital is also slowing down the increase in participation of these programs. This paper doesn’t really address the “Free Rider” problem, which applies to this situation because all farmers benefit a little from any tree being planted anywhere, but an individual farmer benefits greatly from using all of his/her land to farm and letting all the other farmers plant trees.
ReplyDeleteThis problem starts when one farmer takes advantage of all the other farmers helping the system, but they contribute nothing. This doesn’t hurt the system very much when one farmer does it, but when more farmers start to take advantage of the system, then the program actually hurts the few farmers that are participating correctly. The free rider variable is holding these programs back.
The solution to this problem could be to provide a government subside that allowed farmers to still turn a profit on the land that wasn’t being used for farming. This would provide equal incentives to every farmer to help prevent deforestation, while actually hurting the farmers who didn’t participate in agroforestry programs. This solution could reverse the free rider problem and greater improve the efficiency of the increases to human capital that cause these programs’ increase popularity to slow down.
This paper uses Keynes's argument that an individual's profit expectations and uncertainty determine investment decisions, which in the context of this paper refers to the adoption of agroforestry systems. While the explanation of the benefits of agroforestry provided by the paper make it seem as if the only rational decision for subsistence farmers is to switch from slash-and-burn agriculture to agroforestry, understanding the effects of uncertainty helps to put the decisions of the farmers in perspective. The paper illuminates several factors that contribute to uncertainty, one of which is education and prior experience. Theoretically, the higher an individual's education and experience the less uncertainty they have. Given this idea, I found it interesting that this study found that younger individuals tend to be the ones involved in agroforestry. I would generally associate experience with age which is why I found this result peculiar. However, when I consider this in terms of Keynes belief that "animal spirits" also play a role in the investment decision, it makes more sense. Keynes argued that some individuals are inherent risk takers and entrepreneurs and are more willing to make risky investments. With this in mind, I think it would make sense to assume that younger individuals who have not spent decades using the same slash-and-burn tactics would be more adventurous when it comes to trying new agricultural techniques. With this in consideration, perhaps public policy should focus their efforts on educating and providing information to the younger generation of farmers who are more likely to adopt agroforestry. I feel that the older farmers would be more willing to adopt the system if they had tangible evidence of its benefits instead of just research and data that says it works.
ReplyDeleteIn attempting to explain why adoption rates of sustainable activities, specifically agroforestry, are low, this paper specifically and empirically demonstrates the idea we discussed in class on Tuesday of the relationship between productivity levels and rationality. It is a specific example of how the actions of rural farmers could incorrectly be viewed as irrational if one does not consider the high opportunity costs of attempting to alter productivity levels or practices. In class we discussed the fact that farmers would rather stick to what they know and have a solid year rather than attempt to change their practice to achieve higher output but risk having no yield at all. In this case, changing productivity is characterized by an investment in agroforestry while the idea of rational decision-making is discussed in terms of Keynesian ideas of profit expectation, uncertainty, and confidence. The paper notes that there are numerous benefits, both financial and non-financial, of agroforestry as compared to conventional, single output systems (monoculture). However, despite these benefits, there is a significant lack of adoption of this sustainable alternative. The paper hypothesizes that a reduction in the level of uncertainty that deters farmers from adopting these methods can be achieved through investment in human capital. In this way, the market failure we discussed in class of asymmetric information is addressed, and the gap between commonly accepted rational behavior and actual demonstrated behavior can be closed.
ReplyDeleteA key idea in the paper is the notion of “weight” being given to various pieces of information a farmer receives. As information is deemed relevant and thus given more weight, it becomes more of a guide to action. The way a piece of information is perceived, not necessarily just the information itself, will be the determination of investment decisions. Focusing in on this idea, the paper uses human capital as an indirect measure of uncertainty and, through regression analysis, shows that investment in human capital characteristics such as job training (both informal and formal) and formal education can lead to higher adoption rates of agroforestry systems. Again, in doing this analysis, the paper addresses the market failure of imperfect information and attempts to use this idea to explain the seemingly irrational low adoption rates.
This paper highlights the importance of sustainable farming techniques, specifically agroforestry. The benefits from agroforestry will not only be seen by the farmers as they will be better protected against drought while also keeping important nutrients in the soil, but will also serve as a positive externality to the rest of the world because deforestation will decrease. Since deforestation plays a huge role in global climate change, agroforestry implemented on a large scale should help to mitigate the consequences of this growing problem.
ReplyDeleteA big issue concerning the implementation of agroforestry is that a lot of the positive results from it will not be seen in the short run. As a result, the farmers may place a low weight on implementing this new practice and may see it more desirable to continue with slash and burn farming techniques. While increased education to these farmers is important to getting this new era of farming started, I think there is another way to get this project started quicker. If these governments could subsidize farmers for every tree that they planted, there could be more incentive for them to practice agroforestry. The subsidy would only need to be large enough to offset the difference in perceived income from practicing slash and burn to practicing agroforestry. As empirical evidence has shown, some farmers are already practicing the new technique and a majority of them are open to the idea. This leads me to believe that the subsidy would not need to be too large. Furthermore, as this project gets started, farmers will see the positive results and in turn will encourage other farmers to do the same. This snowball like effect would jumpstart this new farming practice to the point where it could be commonplace before not too long.
This paper highlights the importance of human capital and agriculture. With informal specific on-the-job training, formal training and formal education, farmers are more likely to adopt agroforestry. By using Keynes' notion of weight in decision making, the evidence shows that as human capital increases, the "weight" that farmers attach to agroforestry information is expected to increase, and thus their uncertainty about it decreases while the likelihood of program participation increases. This is because agroforestry is an investment decision to the farmer, and a farmer with more human capital is more likely to see the benefits of the investment and be more willing to invest. Support for that decision comes from the "weight" that they place on the agroforestry information, with weight being a function of one's human capital.
ReplyDeleteMore education about agroforestry could lead to a greater participation of farmers in the practice. It's just that these farmer's are skeptical about it because the benefits of agroforestry are not immediate. Agroforestry contributes to species diversity, reforestation, reducing chemical agents, improving soil fertility and stability. Therefore it makes farming more sustainable than monoculture agricultural systems, i.e. slash and burn farming. These sustainability effects aren't immediately seen though, hence the uncertainty that comes with the investment. And uneducated farmers place little weight on the benefits of agroforestry because they know so little about it. Thus the greatest way to improve adoption of agroforestry is educating the farmers. This all is supported by Keynes' theory of investment, which really emphasizes the importance of human capital. The evidence shows that "a farmer with no tree planting experience, minimal education, and no exposure to an extension agent on agroforestry is very unlikely to place much weight on the evidence presented as to the benefits of agroforestry." Though through education and training, that "weight" should increase, and thus the probability of investment should increase as well.
The key takeaway I drew from this paper was that farmers with greater uncertain of outcome will be less likely to adopt agroforestry as a method of production; this is detrimental to both the farmer and the environment Agroforestry offers both financial and nonfinancial benefits such as better use of available land, reduction in time between cash flows and the sharing of costly resources as well as better preservation of environmental quality. However, poor farmers have proven skeptical and slow to adopt agroforestry practices, if they adopt them at all. Casey uses Keynes model to account for what would otherwise seem like irrational decision-making.
ReplyDeleteUnder Keynes theory farmers are still acting rationally, they just suffer from insufficient information and a lack of confidence about the future. This is completely logical, subsistence farmers cannot afford any variation or uncertainly in their production because they depend on their products to survive. The paper clearly shows that human capital matters in a farmer’s decision to adopt agroforestry; the farmer must have an understanding of the practices in order to properly implement them and he must have confidence in his agricultural skills. Because confidence cannot be directly taught, the policy prescription from this paper would advocate for agricultural education to increase farmer’s knowledge or production methods.
This paper by our very own Prof Casey demonstrates just another example of the problem of asymmetric information in the developing world. The uncertainty factor adds another level of nuance, since information a farmer doesn’t trust does him just as much good as no information at all. There’s also a measure of hope though, since once one farmer is educated and knowledgeable about new farming technology or techniques, he can pass that information along to his fellow farmers. Furthermore, he will probably be a more trusted source than an outside agent.
ReplyDeleteWith this in mind, we can envision an aid system where outside agents train the most highly educated individuals (the ones most likely to adopt new technology) in a community. It is then the responsibility of these early adopters to use the new technology and thereby demonstrate by example that it yields higher returns. I feel that actually seeing agroforestry work for one of your neighbors takes away the uncertainty about its value. Then the issue left is training the additional farmers in the village who are ready to now adopt the technology. Either the outside agents could return a year or two later for further training, or the early adopters could train their fellow farmers. Since the early adopter would have to give of his time to train others, this behavior should be incentivized. Maybe for every day he sacrifices farming to train others the household will receive a certain amount of seed, food, or farming equipment.
Of course, raising the base level of education (i.e. human capital) in the community would ensure that more households would adopt agroforestry after seeing it work for their neighbors. Plus, education increased human capability and is therefore good in and of itself.
Jim Casey’s article on Agroforestry in Mexico is interesting in revealing the myriad of benefits derived from agroforestry practices in under developed, agricultural settings. However, I found the article to be the strongest evidence yet of the role that education (or lack thereof) plays in the cyclical nature of poverty.
ReplyDeleteFarmers who choose often choose not to adopt agroforestry practices are often those with low levels of human capital. Thus, there is little knowledge about the actual ecological process of planting trees in such communities. Casey is careful to note that while farmers may have information about the potential benefits of such practices, this external information combined with any (limited) intrinsic foresight of the farmers, does not engender the necessary confidence to implement such practices. In the language of Keynes, the do not attach enough “weight”.
Federal and local government agencies might be inclined to provide increased farm subsidies to such farmers. However, I recommend such institutions mandate youths to attend specialized, agricultural programs. Youths can learn about the process of agroforestry practices that can increase species diversity, serve as a natural fertilizer and improve soil fertility; when these youths graduate, they will have the confidence (weight) to implement these practices- ultimately creating a more efficient agricultural sector. Mandating youths to education, similar to planting trees, is initially capital intensive (in the form of lost labor) with benefits not materializing until many years later. However, both yield results that will trump any preliminary inconveniences.
James Casey’s “Agroforestry Adoption in Mexico: Using Keynes to Better Understand Farmer Decision-Making” uses Keynes’s model of investment determination to explain the low adoption rates of agroforestry. The low adoption rate of agroforestry is initially puzzling because of its financial and nonfinancial benefits. According to Casey, “Some of the sources for the increased financial benefits are (1) more intensive use of the available land, (2) reduction in time between cash flows, and (3) sharing of costly resources, such as fertilizer and herbicides between multiple outputs” (Casey 506). In addition, “Agroforestry…may contribute to (1) increasing species diversity, (2) reforestation, (3) reducing the use of chemical agents on the farm, and (4) improving soil fertility and stability, hence making a claim to being more sustainable than traditional monoculture agricultural systems” (506-507).
ReplyDeleteDespite the numerous benefits of agroforestry, many farmers fail to adopt this method of farming. Casey acknowledges this when he says, “Studies…show higher net present values (NPVs) for agroforestry systems than for monoculture systems, yet farmers in developing countries show low rates of adoption” (507-508). Casey uses Keynes’s theory of investment to reason through this decision not to adopt agroforestry. According to Keynes’s theory of investment, “When decision-makers are uncertain, they attach a low ‘weight’ to their forecast” (508). By Casey’s extension of the theory, “It is possible that farmers with greater amounts of human capital are better equipped to make the adjustments needed to successfully implement an agroforestry production system” (508). As a result, increased human capital and confidence are key factors to increasing agroforestry. The reasons Casey gives for this are, “First, the farmer must have a minimal understanding in order to interpret the information presented by the agroforestry practitioner or extension agent. Second, the farmer must have confidence in his or her own skills and experiences in order to handle the planting, caring of, and eventual harvesting of the trees” (517).
In this paper, the question of human capital comes into play in whether higher levels of human capital increase the likelihood to adopt agroforestry programs. It looks specifically at empirical evidence in Campeche, Mexico, where adoption rates of agroforestry programs are low. Most farmers in Campeche use “slash-and-burn” agriculture, which essentially destroys the nutrient cycle in tropic regions by neglecting trees. This type of farming is popular despite the variety of both financial and nonfinancial benefits that participation in such programs entails for farmers. It is surprising then that agroforestry programs that can provide net economic and ecological benefits are not being adopted by all or at least a large percentage of farmers. Is their behavior irrational? As we’ve seen in many similar examples in class, this behavior is not, in fact, irrational. In the context of such an impoverished society, it is essential to understand the role of risk and uncertainty in such an issue. Farmers cannot simply calculate the net present value of investing in agroforestry. They must obtain a certain level of confidence about the accuracy of the information they receive on the profitability of agroforestry. Using Keynes’s model of investment, the paper takes this into account and offers a theoretical explanation for low adoption rates. This model suggests that a farmer that is more confident in interpreting information will place more “weight” on a forecast and be more likely to invest. In this particular case, farmers with higher human capital would be expected to put more weight on their forecast and, therefore, adopt the agroforestry program. They would hypothetically be better able to understand and interpret the information presented by an agroforestry practitioner, as well as have confidence in personal skill sets needed to handle such a program. Empirical evidence supports this hypothesis, showing that farmers with more human capital are better able to adjust properly and be successful in implementing an agroforestry program.
ReplyDeleteThis paper offers valuable insight into both the extensive benefits of human capital development as well as the role of confidence in economic and investment decisions. Farmers with greater certainty in the returns on their investment in agroforestry are more likely to take that step, and human capital development is a crucial step for them to gain that certainty. As Casey states in the conclusion, "The empirical results lead to the conclusion that investment in human capital, by subsistence farmers in southeastern Mexico, does lead to a higher profitability of adoption / investment in agroforestry." Within this broad category of human capital development, on-the-job training, formal training, and formal education all play significant roles.
ReplyDeleteKeynes' idea of 'weight' in a decision provides a framework that can be used to analyze the specific effect of human capital development. The 'weight' model offers two valuable benefits: it explains why farmers can be advised to do something but not do it and it articulates the steps — or at least the formula — necessary to make such advice more valuable and efficacious. Casey writes that farmers "may place very little 'weight' on this profit forecast made by the agrofoestry practitioner, due to the lack fo relevant information they possess about agroforestry." Consider the example of any generic farmer in a rural village in Mexico. He may read flyers or articles on the benefits of agroforestry, but he could reasonably believe that similar success for him would be unlikely. But if a training program in agroforestry took him to a nearby village where he could see the success firsthand and learn best practices, he will be much more likely to implement such measures himself. This type of training program offers just one possibility of many, but it is certainly a valuable understanding nonetheless.
Using Keynes' investment model, this paper argues that investment in agroforestry depends on the level of human capital for each individual. According to the theory, a person with more human capital is more likely to give weight to the investment ideas presented in something like agroforestry. They are better equipped to realize the long term benefits of present investment. This level of human capital can come from on-the-job experience (i.e. more farming experience), better access to information, or even more formal education.
ReplyDeleteThis idea sounds great, just increase the rural education levels and/or have agroforestry training programs. This will increase relevant human capital, leading to more "weight" being placed on the theory and decreased uncertainty in the investment. This should increase uptake rates. However... there are many confounding problems such as access to credit and insurance in order to smooth over the initial costs of the investment and potentially lower output at the start of the investment. It is nice to blame low uptake on uncertainty, when following Keynes' investment model. Yet, based on the explanation of the investment model in the paper, this model does not seem up to par for current rural, development economics. Yes, uncertainty and therefore human capital plays an important, even critical, role, however it seems that the model is too simple and does not account for the many other factors that go into these farmers' decision making process.
This paper looks at variation in the adoption of sustainable agricultural practices in the form of agroforestry. Adoption rates are extremely low in much of the developing world for an agricultural technique that can lead to higher soil fertility and more output, and overall offers many economic and social benefits. This is a good example of how the poor in the developing world do not fit into our models; at least in the way we generally understand them for rational decision makers in the developed world. Based on our knowledge and models, investments in agroforestry seem like an easy choice, but for some reason many farmers to not invest. Professor Casey creates a new way of thinking about this choice from a different model that addresses how much “weight” farmers give to information about investment choices. In this theoretical model, farmers with lower human capital and less experience with planting trees would not give information about agroforestry as much weight, and would thus be less willing to undertake the time needed to invest in agroforestry. Using data from the Campeche state in Mexico, Professor Casey finds this to be the case.
ReplyDeleteThis touches on themes discussed in class Tuesday and throughout the term and highlights the importance of asymmetric information in developing countries. As is the case for education, it is important to simply educate the poor about the returns to investing in new techniques. This paper is also a good lesson in some of the themes from the very beginning of the term. It shows a different way of taking economic theory to explain the decision making process of farmers in developing countries that previously seemed irrational. Even in situations that don’t make much sense from a purely economic sense, economics still can provide other frameworks to view the problems of development.
This paper offers evidence on the impact of human capital on agroforestry in the Yucatan, and offers evidence against the common notion that poor families do not take advantage of opportunities that would make them more productive. However, as we mentioned in class, that is the result of several market failures and unequal access to knowledge or resources. In Mexico, specifically, Casey looks at the reason farmers are not adopting the clearly beneficial agroforestry techniques. He connects this to Keynes' ideas of decision making, certainty, and "weight". Without information and education about the specific agroforestry technique, farmers aren't going to place much weight on the long-run forecast that they are presented with. Uncertainty is a very important variable in these cases, because there is more at stake than excess capital. Rather, it is often the life and well-being of an entire family. There isn't room to make risky decisions. However, Casey discusses how an investment in human capital can lead to farmers understanding the agroforestry process, and with a solid knowledge they place greater weight on the outcomes and are much more likely to adopt this beneficial process.
ReplyDeleteThis has far-reaching policy implications, because education about a variety of topics could prove to be beneficial in areas beyond farming. This paper provides empirical evidence that it isn't laziness or unwillingness to try new technologies that limits poor farmers from becoming more productive, but rather they are acting in a rational manner to minimize risk. Knowledge about human capital benefits to investment should shape our policies so education and training programs can increase adaptation of new technologies and techniques for farmers in low-income and subsistence farming areas.
For farmers the quality and quantity of their output is reliant on their input. The lack of modern technology in low-income countries contributes to the continual use of traditional farming methods. This paper gives an interesting insight of the struggles that modern farmers face. Specifically, the paper focuses on agroforestry, a practice of farming that integrates trees into an existing farming system. This is in contrast to slash-and-burn agriculture, the process of burning areas of forest to plant new crops. There are more benefits noted that are obtained when farmers use agroforestry. However, this paper also highlights the uncertainty that agroforestry gives farmers. This uncertainty is noted as “weight” in Keynes terms. Factors that affect this uncertainty include the notion that agroforestry requires human capital, knowledge of the process and time, given that returns are not immediate. For many farmers these factors are enough for them to deter from this new farming technique. Some simply cannot afford to undertake this new undertaking if there is a possibility of failure. Table 3 from the data shows that those farmers who are interested in agroforestry are younger and have fewer children. These interested farmers with fewer children may take more risks because they have less of a financial burden than those with more children. It is also beneficial that these interested farmers are younger because they can pass on their training and knowledge of agroforestry to younger generations. Agroforestry may prove to be one way out of the trap that is the cyclical nature of poverty.
ReplyDeleteIn his paper "Agroforestry adoption in Mexico: using Keynes to better understand farmer decision making", Jim Casey questions the impact that a reduction in uncertainty due to increased investment in human capital has on agroforestry participation.
ReplyDeleteThe author finds intriguing that despite the realized benefits of agroforestry, people in the Yucatan do not implement agroforestry. Motivated by this interesting fact, Jim Casey builds a microeconomic model that studies the impact that increased human capital might have agroforestry. However, the author places emphasis on the 'weight' of the decision the farmer makes. This new variable comes from Keynesian theory and it depicts the animal spirits that tend to drive investment in the long run.
The results that he finds support his hypothesis and that if there is increased human capital among farmers, they will place higher 'weight' on their decision to invest. As a result, Yucatan farmers will transition from traditional "slash and burn" agriculture to agroforestry. In addition , one interesting finding from this paper is that contrary to regular expectations, those one with a lower income tend to transition from traditional agriculture toward agroforestry.
Finally, I was wondering whether there might be reverse causality among agroforestry and education I human capital.
This article in combination with our discussion today obliterates the idea that farmers are irrational players in the agriculture game. Although it may be beneficial for farmers to invest in long-term investments it is irrational given the state that many farmers find themselves in. Farmers are often risk averse because of their sensitive situation. Farmers are not in a market with perfect information and there are often coordination failures that do not allow farmers to fully understand the potential benefits of investment. Farmers are often afraid that investment can be risky, they cannot afford to be concerned with the “mean” they must concern themselves with the inevitable down-years. Farmers are risk averse and side with the safe/familiar option even when there could be huge benefits coinciding with investment.
ReplyDeleteThe article discusses the issue of agroforestry. Agroforestry is essentially the idea of having trees in an area of farmland. This has many benefits including: more fertile, less deforestation, and a more diverse eco-system. Furthermore, the traditional act of cutting or burning down trees is harmful to the farmland. Thus, agroforestry is an affective but modern policy that has been met with concern from the traditionalist farmers who are risk aversive.
145 of the 175 farmers surveyed said they’re interested in agro-forestry but only a small percentage are actually practicing the technique. Of the people that are using agroforestry they are young and well educated with fewer children. Younger people are likely to be more open to change and willing to not be afraid of modern technology. Better education is the key, because better educated people are likely to be more confident in, not only their abilities but also the positive effects of agroforestry. This education will give agroforestry more “weight” when considered by farmers.
In conclusion the key is to educate people about the benefits while offering them some sort of security. This security could be access to credit or insurance. It is crucial that farmers know that this investment will not leave them starving and without income.
The article attempts to understand how the decision whether or not to use agroforestry is made by small-scale, nearly subsistence level farmers in Mexico. The two inter-related key concepts are Keynesian weight and uncertainty. The hypothesis is that farmers who are more confident in their ability to understand the agroforestry program are able to place greater weight in the projections so improved yields, diversified income streams, and higher soil quality. The more confidence a farmer has in those projections the easier it is to overcome the uncertainty of the required investment, need to learn new skills, and changing from established ways of farming. Through a survey of 175 farmers, the predictions this hypothesis makes seem to generally hold true. Farmers with higher human capital, formal education or prior experience with agroforestry were more likely to adopt agroforestry. The only expectation that was not met and also went largely unexplain was why those who had adopted agroforestry had lower incomes, which would seem to have a potential impact on other adopting it. Because if a farmer who has not adopted agroforestry is looking at his better educated more experience neighbor who has adopted agroforestry but is not making less money than he/she is, this seems to add to the uncertainty of the potential benefits.
ReplyDeleteThis was a particularly interesting way to examine why farmers may not make investments in new agricultural methods. On Tuesday we developed the explanation that while the new methods offer potentially higher yields, there is also greater variability in those yields so farmers would opt for the lower level more secure yield. This though is different in examining how a farmer may discount a prediction made on the benefits of new crops based on her/his ability to understand the basis for the projection. For example if the projected benefit may be valued at 4 and the potential cost is 3, then it would seem the farmer should adopt the change, but if they are only partially, say 50% confident in their understanding in the prediction, the perceived benefits may only be valued at 2 and the cost at 3 leading the farmer to not adopt the new method. This analysis seems useful in a wide range of applications and provides a better understanding into decision making than assuming rational actors with perfect information.
Focusing on the decision by farmers in the Yucatan to abstain from engaging in agroforestry, this paper by Casey addresses a more fundamental economic question - why, at various times and in a multitude of situations, people don't make the rational choice economics would lead us to believe they should. Casey explains a theory put forward by Keynes; when people weigh an argument or philosophy, they give more "weight" to something they have more information and certainty towards a positive end goal. This translates into his hypothesis, that farmers who have more knowledge and are confident in the ability of agroforestry to yield benefits will be more likely to adapt this method of farming. Reading this paper was remarkably refreshing, especially after reading and discussing so many different examples where people don't act in the most rational way, and finally having a potential answer posed. Keynes argument made sense in this context, and Casey's hypothesis seemed to have found a positive correlation between increased human capital (knowledge and understanding) and an adoption of agroforestry by farmers.
ReplyDeleteThe one point that really resonated with me while reading this article was Casey's emphasis on confidence among farmers' perception of their ability to care for any trees they planted. It seems that so often in economics, people are held as 'equal' in intellectual, physical, and mental capacities, and yet the argument that confidence could affect the decision process makes perfect sense. Overall, this article not only addressed an interesting subject in the discussion of the benefits of agroforestry, but it also broadened the traditional ideas of economics in taking into consideration some of the more 'human' traits that go into the decision making process.
It is obvious that the rational decision for an individual farmer in a tropical area, considering future gain, is to invest in agroforestry. However, like all things related to economic development, it is never this simple. When considering ways to inspire growth in such a detrimental sector of the economy, it is important to consider ways to incentivize those involved. One must consider the benefits and constrains in both the short and longer term and analyze the decision patterns and attitudes of the farmer.
ReplyDeleteIt is simply not productive to practice monoculture production in a tropical environment. Agro forestry will increase productivity, reduce slash and burn, promote healthy soil and, in the long, run allow for an increase in a farmer’s profitability. However there are many constraints, the greatest being that Agroforesty has a high initial cost with a hope for future gain. This is a hard concept for sustenance farmers to favor. Farmers require a greater initial benefit to provide a bit of insurance for such a large investment
Based on the empirical evidence, I believe that the best way to incentivize these farmers is to educate them. It seems to be the most effective way to convince a sustenance group that there is gain to be had at a time other than the present. I think it is important for the government or an NGO to promote a plan to invest in human capital to promote agroforestry. This could develop the agricultural sector of developing countries in a way that would rapidly induce growth for the country as a whole.
“Agroforestry adoption in Mexico” looks at farmers’ uncertainty and their likelihood of participating in an agroforestry development process. The individual’s expected benefits varies heavily upon his own human capital because of the value (“weight”) he places upon investment. Casey’s empirical evidence shows that those with more human capital are more likely to adopt an agroforestry implementation. This is consistent with complementary research and encourages the elucidation of farmers in the benefits of agroforestry, a major component of which would be the ability to understand the adoption program.
ReplyDeleteWhile Casey’s paper highlights agroforestry in the tropical region of Campeche, Mexico, one wonders if tree farming would yield the same benefits elsewhere in the world, not only in the sub-regions of Latin America. The importance of extending this work to the rest of the world becomes evident when one looks at the benefits to the farmer as well as his whole community. Historically, implementers of agroforestry report economic as well as ecological gains because of attention to trees. Firstly, agroforestry leads to a more effective cultivation of the farm land. Agroforestry also increases the frequency of cash flows and spreads the cost of fertilizer and herbicides over multiple products.
The assessment of these three economic returns would start with the effective cultivation of the land and the translation to more nutrient rich crops if not a greater yield of crops and the future benefit of selling the lumber from the trees. Apparently planting trees allows the crops to grow faster and thus the turnover to increase and payments to be received more often. Finally, fertilizer and herbicides must now be spread over the crops as well as the trees. An important element that one might question is the results of studies that examine the benefits of agroforestry both short term and long term matched with the cost of such investments. Another interesting question might be the most effective way to implement an agroforestry system.
The structure of this paper is interesting, whether or not it was intentional. The conclusion is that greater human capital decreases the uncertainty associated with agroforestry because farmers place more "weight" to information, which increases the likelihood that they will participate in such a program. The increase in human capital means that farmers now have sufficient understanding of agroforestry, at least to understand the relevant information that they are given by a "agroforestry practitioner or extension agent." Also, they have greater confidence (thus, less uncertainty) in their skills and experiences to sustain this long-term investment. The key is knowledge, or as specified in the article, relevant knowledge that has the effect on uncertainty. (It can be generalized that uncertainty arises from a lack of knowledge, in a situation when the obvious rational action is to invest.) I mention the structure of the paper because for the first page and a half, I had no clue what agroforestry was and indeed, I did not know why someone should adopt it. I did not connect deforestation with increased agricultural output. I only understood the concept when I read, "simply put, agroforestry entails planting trees on farms." I can imagine that farmers may think that agroforestry seems counterintuitive to production growth since planting more trees occupies valuable land, in area and in nutrients. They burn down trees to replenish the soil, to plant more seems to be against the known and practiced strategy. An interesting use of the trees is to serve as an indication of boundaries around a property. This could complement land reform policies because it serves as another tool for property rights, which will increase certainty and confidence to motivate a farmer to be more efficient.
ReplyDeleteLike many problems and potential solutions that we have learned about, failure to adopt these strategies is a classic example of the chicken and egg problem. Farmers will not invest in agroforestry if they do not know or are uncertain about the benefits because they cannot see the physical evidence. There is no physical evidence to appease the concern if the farmers do not engage in the practice. So what happens? Government? NGO's? And once more, it will depend on the region and the specific social, political, cultural, economic, environmental factors.
*I am curious to know how many of the farmers start to practice agroforestry on their farms after they were given the survey because of that little exposure to information.
“Agroforestry Adoption in Mexico” by James Casey discusses the decision making process of adoption agroforestry or continuing traditional farming methods like slash-and-burn agriculture. Understanding this rationale is important because agroforestry reduces deforestation. This is an environmental practice that many people do not implement.
ReplyDeleteAgroforestry is the planting of trees on farms. This sustainable practice more adequately uses the available land, reduces time between cash collections, and spreads fixed costs of resources like fertilizer and herbicides among more outputs. Also, this farming strategy increases species diversity, reforestation, reduces the use of chemical agents, and improves fertility and stability. When slash-and-burn agriculture is practiced the trees are eliminated and so is the nutrient soil. Also, farmers without trees will experience soil erosion from rainfall. At first glance, agroforestry seems like the easy choice for preferred agriculture practice. Casey asks why people do not choose these apparent benefits. This is a topic we have discussed many times, like in the “The Economic Lives of the Poor” when the farmers did not purchase fertilizer for their land even though it can increase returns.
After interviewing 175 farmers in Mexico, Casey concludes that a person with higher human capital is more likely to use an agroforestry program. According to Keynes, the more weight of evidence a person places on a forecast, the more confident he will be in that forecast. However, if the person cannot understand the information or is not confident in his interpretation of the information, he will place little weight. Agroforestry is risky to many farmers because it requires new skills, time and the returns are delayed. Farmers with greater human capital can better use technology and interpret information.
While I was in Nicaragua, I visited a farm that practiced agroforestry. The farm had multiple outputs, was lush with diversity, and was ultimately successful. The farmer was better educated than other farmers I visited. He learned about fertilizer and recycling in order to better his farm. I also visited a farm that practiced slash-and- burn agriculture. The farm was dry and flat. Also, it had low yields and only produced one product at a time. Investment in human capital would change the landscape of Mexico and Nicaragua for the better.
This paper highlights some of the pitfalls of poverty that we have discussed throughout the year. Casey successfully shows that failures to invest in agroforestry among subsistence farmers in southeastern Mexico are related to a lack of human capital. Agroforestry is an extremely important farming technique because it is a sustainable practice that maintains crop production while simultaneously replenishing the soil. However, a majority of the farmers in this area use slash and burn agriculture, a technique that destroys trees which happen to be the most essential part in the tropical nutrient cycle. Agroforestry provides a solution to this problem by not only solving the deforestation problem but by providing a farming technique that produces a higher yield at a more sustainable rate.
ReplyDeleteThe problem that Jim Casey presents is that there is a high degree of uncertainty and risk for these farmers in switching from their traditional farming techniques that are in fact harmful to them to agroforestry which can benefit their farming and their lives in many ways. Casey points out that if a poor forecast is perceived in investing in agroforestry then the farmers are much less likely to adopt the practice. Often times these farmers view agroforestry poorly because they simply have little information about how to utilize the practice or the future benefits of switching to agroforestry. Furthermore, just as we saw in the rationale for maintaining child labor among the poor, these farmers returns from agroforestry are in the long term and thus they opt for the slash and burn method that will provide them with immediate and income.
Casey points to a number of ways that we can increase human capital among these farmers and thus increase the use of agroforestry. Among these are informal specific on-the-job training, formal training, and formal education. Through his empirical analysis Casey is able to identify seemingly obvious solutions to a major problem in this area. Casey once again reminds us that the poor are rationale actors seeking to maximize their utility just like everyone else and that me must not jump to conclusions about poor's seemingly backwards choices.
In this paper, Casey highlights the level of human capital of farmers as hugely important in the adoption of innovative agricultural practices. Economists may be tempted to say that since farmers are rational actors, they will automatically adopt the practice that yields the most profit, but that is certainly not the case. Casey offers a good explanation of this conundrum with Keynes' theory of investment decisions in relation to human capital. His study shows that farmers who are more educated and more experienced in planting trees are more likely to invest in agroforesty, which is consistent with his hypothesis. This paper effectively demonstrates the value of investment in human capital, such as education, for the economic development of impoverished rural areas.
ReplyDeleteAgroforestry provides a possible opportunity to dramatically increase the productivity of agriculture in developing countries. With this information, why haven’t more farmers adopted this method? Why have they kept using slash and burn farming, which affects the other uses of the land and requires a dormant period where the land needs to replenish the nutrients? This study investigates whether or not human capital has a role in the adoption of agroforestry. Using Keyne’s model, with the famous saying “investment is a flighty bird,” Casey explains that investments are risky and having information and confidence in the investment is key. Part of this article reminds me of what we read in last week’s child labor piece. Agroforestry is different than the historical ways of farming and also has long-term returns, much like child education. Therefore, with the findings of this article, we now know that educating farmers and giving them confidence in agroforestry will increase the likelihood that they will adopt this method.
ReplyDeleteIn my microeconomics class we have been discussing how that the government should invest every dollar that has a real marginal value no less than a dollar. I would think that the returns to the state would be large for an investment in Agroforestry as it would lead to long term reduced costs to the state in the form of subsidies to farmers as well as increase farmers incomes to taxable levels (higher taxes if they are already paying taxes). It would make the most sense for governments to run a program sort of like a big push to move all farmers to agroforestry. While I'm sure such an investment would be expensive I believe that eventual returns both economically and socially would easily outweigh the initial cost. This is not the type of thing that the government should try to incentivize, but should take responsibility for.
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