Description

Abstract: A modeling tool applying net present value economic analysis was developed to estimate long-term economic returns to labor and land for smallholder cropping systems in the upper River Njoro watershed. Production expenditures and income over a 15 year time horizon, for a typical farm household cultivating 2.5 hectares of maize-bean intercrop, pyrethrum, and potato mix were characterized based on field work. Results (2003 values) indicate annual net present value returns to land under the current system average Ksh 3,488/acre ($46/acre), and net farm income to the household averages Ksh 25,646 ($342) per year. Net returns are particularly sensitive to maize yield and price, cost of seeds, and the discount rate. The tool can be adapted to evaluate the economic consequences to farmers of adopting alternative agronomic practices and cropping systems. Estimated changes in farm income can be quantified and used to assess whether economic incentives are necessary as part of efforts to investigate improved environmental land management and development programs in the Njoro watershed. Farmer field trials, research experiments, and pricing information provide the agronomic and economic data to characterize proposed new practices such as agroforesty, riparian tree planting, set-aside, and soil conservation in the model. Such agro-economically grounded quantitative estimates of smallholder income and cash flow impacts and sensitivity from adoption of natural resource management and conservation practices provide a critical input to the process of developing locally successful environmental land and water management programs in threatened resources systems such as the Njoro watershed.