Date of Award

Fall 2018

Project Type

Thesis

Program or Major

Natural Resources and Environmental Studies

Degree Name

Master of Science

First Advisor

Shadi S. Atallah

Second Advisor

Heidi Asbjornsen

Third Advisor

Marek Petrik

Abstract

Coffee production is severely affected by global climate change. One of the important impacts comes from the increasing infestation and distribution of coffee berry borer (CBB), the most damaging coffee pest worldwide. Shade-grown coffee (SGC) systems can alleviate the impacts and increase the resilience of coffee farms by providing non-market and market ecosystem services.

From an ecological perspective, SGC systems can provide many non-market ecosystem services such as pest risk mitigation, soil water retention, soil fertility, and pollination, which are all critical factors affecting coffee yields. From a financial perspective, SGC systems can benefit farmers by increasing the prices through shade-grown certification price premiums or quality price premiums, reducing price risks faced by farmers by providing alternative sources of income such as shade, and reducing the production risks by allowing more steady year-to-year coffee production. However, SGC systems can be more labor-intensive and often produce lower yields either due to lower per-shrub yields or due to lower coffee shrub density, or both, which can decrease farmers’ profits.

Although farmers might agree that environmental conservation is an important goal of SGC systems, planting decisions are likely to be driven by farm production costs and revenues. The existence of trade-offs between ecosystem service provision and coffee production calls for an integrated bioeconomic analysis of SGC systems before recommendations can be made to farmers, with the net value of ecosystem service provision and the risk effects taken into consideration.

In this thesis, we construct an integrated bioeconomic model, including a cellular automata model, a coffee yield model, and an economic model, to incorporate the ecosystem services and risk preferences into a farmer’s decision-making and find the optimal amount of shade on a coffee farm for risk-neutral and risk-averse farmers.

Results show that, for risk-neutral farmers, the shade-grown systems generate higher net present values (NPVs) than sun-grown systems within shading levels of 12% - 37%. The optimal shading level is 24% and the optimal NPV is about $24,593 /0.5ha over 25 years. For moderately risk-averse farmers, shade-grown systems generate higher utility than a sun-grown system at any shading level, and the optimal shading level is 30%. Higher risk aversion leads to higher shading level selection.

In the United States, the CBB is a new threat to the domestic production in Puerto Rico and Hawaii. Results of this thesis can inform policy discussions on the economic argument for shade-grown coffee systems that, under optimal shade levels, can maximize farm profits while to protecting farmers from temperature and price risks.

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