Economic analysis of living fences in Central America: development of a methodology for the collection and analysis of data with an illustrative example

Central America has experienced a high degree of deforestation and degradation of its natural resources, resulting in a scarcity of forest products against increasing demands for the same products. As a possible solution, development of agroforestry systems has become a priority in the region. To show the small farmer that these agroforestry systems are beneficial and also to identify the most appropriate systems, good data for analysis are needed. During initial phases in the development of socioeconomic research in agroforestry systems, there were few or no methodologies available for data collection and economic analysis of agroforestry systems. The Tropical Agricultural Research and Training Center, CATIE, responded by developing standard forms and systematic methodologies, including three aproaches, for collecting and analyzing this information. The data and summary analysis are stored and accessible in a computer database. A summary of these methodologies and an example of a 10-year financial cash flow analysis of a living fence system are presented. It was found that establishing and managing 715 m of living fences under small farm conditions generates an internal rate of return of 28.8 perecent and a net present value of benefits equivalent to 107,23. Using a 12 percent discount rate, this system represents a profitable alternative for the small farmer.