Data Appendix Available Online A data appendix to replicate main results is available in the online version of this article.
A real options model to assess the role of flexibility in forestry and agroforestry adoption and disadoption in the Lower Mississippi Alluvial Valley
Article first published online: 21 NOV 2012
© 2012 International Association of Agricultural Economists
Volume 44, Issue 1, pages 73–91, January 2013
How to Cite
Frey, G. E., Mercer, D. E., Cubbage, F. W. and Abt, R. 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. doi: 10.1111/j.1574-0862.2012.00633.x
- Issue published online: 8 JAN 2013
- Article first published online: 21 NOV 2012
- Received 26 May 2011; received in revised form 1 June 2012; accepted 28 September 2012
- Real options;
- Alley cropping;
- Bottomland hardwoods
Efforts 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.