Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/19826
Authors: 
Waibel, Hermann
Wesseler, Justus
Mithöfer, Dagmar
Year of Publication: 
2005
Series/Report no.: 
Proceedings of the German Development Economics Conference, Kiel 2005 / Verein für Socialpolitik, Research Committee Development Economics 35
Abstract: 
Indigenous fruits contribute widely to rural incomes in Southern Africa but their availability is declining. A domestication program aims to increase farm-household income and conserve biodiversity through farmer-led tree planting. Planting domesticated indigenous fruit trees is an uncertain, irreversible but flexible investment. Our analysis applies the real option approach using contingent claims analysis, which allows solving the discounting problem. The article analyses (1) to what level fruit collection cost and/or (2) the necessary technical change, i.e. breeding progress, have to rise in order to render tree planting economical, using data from income portfolios of rural households in Zimbabwe. Results currently show that collecting indigenous fruits is more profitable than planting the trees. A combination of technical change and decrease in resource abundance can provide incentives for farmer-led planting of domesticated trees and biodiversity conservation. However, breeding progress must be significant for investment in tree planting to be economically attractive.
Subjects: 
indigenous fruits
real option
technology adoption
uncertainty
ex ante impact assessment
Zimbabwe
JEL: 
Q16
Q23
O13
Q01
Document Type: 
Conference Paper

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