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A real options model to assess the role of flexibility in forestry and agroforestry adoption and disadoption in the Lower Mississippi Alluvial ValleyAuthor(s): Gregory E. Frey; D. Evan Mercer; Frederick W. Cubbage; Robert C. Abt
Source: Agricultural Economics 44:73-91
Publication Series: Scientific Journal (JRNL)
Station: Southern Research Station
PDF: Download Publication (905.16 KB)
DescriptionEfforts to restore the Lower Mississippi Alluvial Valley’s forests have not achieved desired levels of ecosystem services production.We examined how the variability of returns and the flexibility to change or postpone decisions (option value) affects the economic potential of forestry and agroforestry systems to keep private land in production while still providing ecosystem services. A real options analysis examined the impact of flexibility in decision making under agriculture, forestry, and agroforestry and demonstrated that adoption of forestry or agroforestry systems is less feasible than would be predicted by deterministic capital budgeting models.
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CitationFrey, Gregory E.; Mercer, D. Evan; Cubbage, Frederick W.; Abt, Robert C. 2013. A real options model to assess the role of flexibility in forestry and agroforestry adoption and disadoption in the Lower Mississippi Alluvial Valley. Agricultural Economics 44:73-91.
KeywordsReal options, Agroforestry, Alley cropping, Bottomland hardwoods
- A Real Options Method for Estimating the Adoption Potential of Forestry and Agroforestry Systems on Private Lands in the Lower Mississippi Alluvial Valley, USA
- Economics of Agroforestry
- A Role for Agroforestry in Forest Restoration in the Lower Mississippi Alluvial Valley
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