Modeling the Economic Potential of Silvopasture in Eastern North
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AN ABSTRACT OF THE THESIS OF Sonia Rose Bruck for the degree of Master of Science in Forest Ecosystems and Society presented June 13, 2016. Title: Modeling the Economic Potential of Silvopasture in Eastern North Carolina and Northeastern Oregon and Exploring Eligibility of Silvopasture to Enroll in Carbon Markets in the United States Abstract Approved: ___________________________________________________________________________________ Badege Bishaw ABSTRACT Silvopasture is the planned and managed agroforestry system in which forage, livestock, and trees or shrubs are integrated in order to enhance individual components. Silvopasture has been identified as the most promising agroforestry system for the Pacific Northwest and Southeast United States. However, there have been few studies describing the economic viability of silvopasture in these regions. There are two objectives explored in this study: first, to determine the potential for silvopasture as an economically viable income source to farmers in eastern North Carolina and northeastern Oregon by calculating the Land Expectation Value (LEV), Net Present Value (NPV), Internal Rate of Return (IRR), and Annual Expectation Value (AEV), of realistic silvopastoral management regimes, compared to traditionally managed timber or livestock farms; second, to explore whether silvopasture can store as much or more carbon than a traditionally stocked timber plantation, and whether profits from sequestered carbon are possible at this time in the United States. The most profitable silvopasture regimes for eastern North Carolina were cool season grasses combined with loblolly pine at a four percent real discount rate (LEV = $1,025 per acre) and cool season grasses combined with longleaf pine at a four percent real discount rate (LEV = $285 per acre). Traditionally stocked loblolly pine at a four percent real discount rate accrued an LEV of $1,777 per acre, while longleaf pine had negative returns (LEV = -$143 per acre). The cattle standard model for eastern North Carolina accrued an LEV of $2,069 per acre at a four percent real discount rate. The most profitable silvopasture regime for northeast Oregon was native forage establishment with ponderosa pine at a four percent real discount rate (LEV = $274 per acre). Planted ponderosa pine had negative returns for all economic indicators (LEV at four percent real discount rate = -$411). The cattle standard model accrued an LEV of $954 per acre at a four percent real discount rate. Models suggest loblolly pine timber management and cattle management is more profitable than silvopasture management in eastern North Carolina. Additionally, cattle management is more profitable than silvopasture in northeastern Oregon. Longleaf pine and ponderosa pine are not profitable when solely managed for timber, and benefit economically when combined with livestock. There is a growing appreciation for ecosystem services from Silvopasture in the scientific and public community. Tree canopy provides shade and a barrier from adverse weather for livestock herds. Silvopasture can also aid in increased biological diversity, reduced erosion, increased nutrient uptake, and enhanced carbon sequestration. In addition, silvopasture has the potential to store significant amounts of carbon, which benefits society as a whole. Therefore, it is amenable to include the social externalities of profitability in cash flow analyses. Currently there are only voluntary cap and trade markets. The most well-known is arguably the California Air Resources Board (ARB), regulated by the California Environmental Protection Agency. Unfortunately, silvopasture does not qualify at this time for carbon markets in the United States. ©Copyright by Sonia Rose Bruck June 13, 2016 All Rights Reserved Modeling the Economic Potential of Silvopasture in Eastern North Carolina and Northeastern Oregon and Exploring Eligibility of Silvopasture to Enroll in Carbon Markets in the United States by Sonia Rose Bruck A THESIS Submitted to Oregon State University In partial fulfillment of the requirements for the degree of Master of Science Presented June 13, 2016 Commencement June 2017 Master of Science thesis of Sonia Rose Bruck presented on June 13, 2016 APPROVED: _________________________________________________________________________________________________ Major Professor, representing Forest Ecosystems and Society _________________________________________________________________________________________________ Head of the Department of Forest Ecosystems and Society _________________________________________________________________________________________________ Dean of the Graduate School I understand that my thesis will become part of the permanent collection of Oregon State University libraries. My signature below authorizes release of my thesis to any reader upon request. _________________________________________________________________________________________________ Sonia Rose Bruck, Author ACKNOWLEDGEMENTS First and foremost I would like to thank my major adviser, Dr. Badege Bishaw, who allowed enough space for me to think critically and devise solutions to problems I have confronted, while continuously providing critical feedback and guidance. Dr. Bishaw always kept an open door policy to both his office and home, and pushed me to expand my horizons both personally and academically. In addition, I would like to thank Dr. Fred Cubbage, who had faith that I could take on this project, insisted on bi-weekly meetings, provided me with an economic education, and always a good laugh. Words cannot express my gratitude. I would like to thank Dr. Tammy Cushing for reviewing thesis drafts and providing personal and professional guidance. Furthermore, I would like to thank Dr. Ricardo Mata-Gonzalez and Dr. Andrew Valls for serving on my committee. I would also like to acknowledge faculty and extension at North Carolina State University and North Carolina A&T, including Dr. Miguel Castillo, Dr. Joshua Idassi, and Tom Ward, as well as personnel at the Center for Environmental Farming Systems. Moreover, I would like to acknowledge faculty and extension at Oregon State University, including Steve Bowers, Rick Wagner, Jamie Knight, Leticia Varelas, Paul Oester, and Dr. Tim DelCurto. Furthermore, I would like to thank the landowners who graciously allowed me to visit their farms in both North Carolina and Oregon. Thank you to Tess Krampien, for being my lab mate and big sister through graduate school. Finally, I would like to thank my family, Dr. Robert and Debra Bruck, Dr. Isaac Bruck, and Sarah Rosner, as well as friends across NC and OR for more reasons than I can enumerate here. This one’s for you mom. CONTRIBUTION OF AUTHORS For “Modeling the Economic Potential of Silvopasture in Eastern North Carolina and Northeastern Oregon and Exploring Eligibility of Silvopasture to Enroll in Carbon Markets in the United States,” Badege Bishaw, Frederick Cubbage, Tamara Cushing, and Ricardo Mata-Gonzalez, provided guidance in project design, analysis, and editing. TABLE OF CONTENTS History of Farming in the United States and the Option for an Alternative Farming System .................................................................................................................................................................................... 1 Agroforestry Definition .................................................................................................................................. 11 Calculating Economic Potential for Silvopasture ................................................................................ 14 Silviculture and Timber Sales ...................................................................................................................... 22 Silvopasture Tree Spacing and Design in Eastern North Carolina and Northeastern Oregon ................................................................................................................................................................... 40 Forage Grasses in North Carolina and Oregon ..................................................................................... 42 Livestock Sales and Volatility ...................................................................................................................... 47 Silvopasture Benefits for Livestock .......................................................................................................... 51 Potential for Silvopasture to Sequester Carbon................................................................................... 53 Economics of Silvopasture Carbon Management ................................................................................ 60 Carbon Pricing and ARB Eligibility ............................................................................................................ 64 Conclusions of Silvopasture Carbon Payments .................................................................................... 71 Methods and Cash Flow Analysis for Eastern North Carolina ....................................................... 73 Eastern North Carolina Results .................................................................................................................. 83 Discussion for Eastern North Carolina .................................................................................................... 92 Methods and Cash Flow Analysis for Northeastern Oregon ........................................................... 94 Northeastern