ANALYSIS

Valuing environmental benefits of silvopasture practice:

a case study of the Lake Okeechobee watershed in Florida

Ram K. Shrestha, Janaki R.R. Alavalapati*

School of Forest Resources and Conservation, Institute of Food and Agricultural Sciences, University of Florida, P.O. Box 110410,

Gainesville, FL 32611-0410, USA

Received 29 May 2003; received in revised form 28 January 2004; accepted 28 January 2004

Available online 19 June 2004

Abstract

Silvopasture, which combines trees, forages, and shrubs with livestock operations, has potential for limiting phosphorus

runoff, sequestering atmospheric carbon dioxide, and improving habitat for wildlife. This study estimates the public demand for

these environmental services in south-central Florida’s Lake Okeechobee watershed using a stated preference approach. The

results from a random parameter logit model reveal that households would pay US$30.24 – 71.17 per year for 5 years for these

environmental benefits. These estimates provide a basis for formulating policies to promote silvopasture practices in the Lake

Okeechobee watershed.

D 2004 Elsevier B.V. All rights reserved.

Keywords: Pollution runoff; Public good; Stated preference; Willingness to pay

1. Introduction

Silvopasture practice is an agroforestry technology

combining trees, forage, and shrubs with livestock

operation. Many researchers have noted that silvopasture practices provide environmental benefits such as

water quality improvement, soil conservation, carbon

sequestration, wildlife habitat protection, and aesthetics (Alavalapati and Nair, 2001; Clason and Sharrow, 2000; Garrett et al., 2000; Kurtz, 2000). These

environmental benefits are largely attributed to tree

and other vegetation cover on cattle ranches. Besides

the above environmental benefits, trees and vegetation

cover complement livestock operations by providing

shade to cattle (Kurtz, 2000; Clason and Sharrow,

2000; Pimentel et al., 1995).

Water quality benefits of maintaining trees and other

vegetation on farms and ranches are realized by reducing pollution runoff, maintaining long-term water cycle, and recharging ground water aquifers (Wu et al.,

2001; Stednick, 1996). Research on riparian buffer

strips’ impact on surface runoff suggests that tree and

grass buffer strips 20 –30 m wide control up to 77%

phosphorus and 80% of nitrogen runoff (EPA, 1995;

Garrett et al., 2000). For these reasons, silvopasture is

an important land-use practice through which ranchers

can contribute to the improvement of water quality.

Carbon sequestration is another important benefit

that silvopasture can generate by storing atmospheric

carbon dioxide in the form of tree biomass. Added tree

0921-8009/$ - see front matter D 2004 Elsevier B.V. All rights reserved.

doi:10.1016/j.ecolecon.2004.01.015

* Corresponding author. Tel.: +1-352-846-0899; fax: +1-352-

846-1277.

E-mail address: janaki@ufl.edu (J.R.R. Alavalapati).

www.elsevier.com/locate/ecolecon

Ecological Economics 49 (2004) 349 – 359
cover on pasturelands is expected to increase carbon

storage. Under the Kyoto Protocol, it is likely that

carbon credits can be obtained for new or expanded

tree cover in silvopasture (Sedjo, 2001; Cannell,

1999). Literature suggests that an acre of southern

pine grown in silvopasture with 20-year rotation could

absorb anywhere between 145 and 220 tons of carbon

dioxide (Cannell, 1999; Grierson et al., 1992).

Private lands play a key role in supporting habitat

for various wildlife species.1 In particular, private

pasture and ranchlands of south-central Florida support various wildlife species including Sandhill Crane,

Burrowing Owl, White-tailed Deer, and the endangered Crested Caracara (Caracara cheriway) (Morrison and Humphrey, 2001; Swisher et al., 2000). Trees

and other vegetation on private forests, farms, and

ranches often provide critical habitats for many threatened and endangered species (Loomis and Helfand,

1993).

Silvopasture, considered highly compatible with

traditional ranching, includes several elements of best

management practices for ranchers. In addition, silvopasture addresses non-point source pollution runoff

and other key environmental problems in a more

rigorous and systematic way (Bottcher et al., 1995;

Clason and Sharrow, 2000; Ribaudo et al., 1999).

Environmental benefits associated with silvopasture

are public goods as they are not exclusive to ranchers,

yet ranchers bear the entire cost of producing them.

For this reason, ranchers may not consider these

services in their production decisions and are less

likely to adopt silvopasture practices on voluntary

basis. If these services are internalized through compensation policies, however, ranchers may begin to

adopt silvopasture and generate environmental services at optimum levels. The first step in formulating

compensation policies is to generate information

about the demand for environmental services as valued by the public. In this study, we estimate the value

of environmental goods and services of silvopasture

using the stated preference method. In particular, we

elicit public willingness to pay (WTP) for improvements in water quality, carbon sequestration, and

wildlife habitat through silvopasture practices in the

Lake Okeechobee watershed, Florida.

The value of a public good is the sum of what

individuals would be willing to pay for it (Varian,

1992; Sugden, 1999; Ley, 1996; Besley and Ghatak,

2001; Falkinger et al., 2000). Valuation of environmental improvement associated with forestry and agricultural practices has been extensively studied

(Cooper and Keim, 1996; Lohr and Park, 1994; Mitchell and Carson, 1989; Bateman and Willis, 1999;

Champ et al., 1997). For example, Cameron et al.

(2002) estimated non-market value of tree plantation

on public lands accounting for the benefits of providing

shade in summer, windbreaks in winter, and absorbing

carbon dioxide. Loomis et al. (2000) assessed the value

of vegetation buffer strips along streams, which increase ecosystem services such as erosion control,

water quality, and fish and wildlife habitat. However,

the value of agroforestry environmental benefits in

terms of public willingness to pay has rarely been

studied. To our knowledge, this is the first study that

attempts to value environmental benefits of silvopasture practices from the public perspective.

2. Study area

The northern watershed of Lake Okeechobee in

Florida extends nearly 12,950 km2 in the central

peninsula, encompassing the Kissimmee River to the

north and its ensuing flow into the Everglades to the

south (SFWMD, 2002). The watershed drains into the

Lake Okeechobee, a large, shallow fresh water lake

with a surface area of 1890 km2

. It is the largest

freshwater lake in Florida and the second largest in the

US, after the Great Lakes (EPA, 2000). As a source of

drinking water, Lake Okeechobee is designated as a

Class I water body. In addition, it is a source of

irrigation and ground water, habitat for fish and

waterfowl, as well as an avenue for flood control,

navigation, and recreational uses.

Cattle ranching is the dominant land-use practice in

the Lake Okeechobee watershed (Boggess et al., 1995;

1 In the US, private farms and forests covered 66% of total land

area and support 80% of wildlife habitat (Benson, 2001).

2 Pasture improvement includes designing site drainage,

growing improved forage grasses, and applying inorganic fertilizers

(Boggess et al., 1995).

350 R.K. Shrestha, J.R.R. Alavalapati / Ecological Economics 49 (2004) 349–359
FAS, 2000) with over 65% of the area under improved

and semi-improved pasture.2 The watershed currently

supports approximately 700,000 cows and calves,

nearly 40% of Florida’s total cattle population (FCA,

1999; FAS, 2000). Florida ranks the 10th in the US and

the 3rd in states east of the Mississippi River for beef

cattle herd size. While most (98%) of Florida’s ranches

are relatively small and entirely dependent on cultivated grasses and legumes for grazing, the remaining

2% primarily located in central and south Florida

comprise about 75% of the pastureland and support

48% of Florida’s cattle. These large ranches each

consist of more than 750 cows (Wade et al., 2001).

Despite great economic significance of cattle

ranches in the Lake Okeechobee watershed, there

has been a growing public concern about the pollution

runoff caused by these ranches. Cattle ranches are

identified as one of the non-point sources of phosphorus loading, which causes nutrient enrichment and

eutrophication in lake waters (Boggess et al., 1995;

SFWMD, 2002; Zhang and Essex, 1997). As cattle

pastures are developed with improved grasses such as

bahia grass (Paspalum notatum) and to accommodate

higher stocking density of animals, more feed and

fertilizer are imported into the watershed (Boggess et

al., 1995). These imported nutrients ultimately leach

into the streams and lakes through surface runoff and

increase the phosphorus concentration in Lake Okeechobee. The concentration has increased from about

0.025 Ag/l (25 parts per billion) in 1968 to 0.11 Ag/l in

1998, exceeding the US Environmental Protection

Agency recommended level of 0.040 Ag/l (EPA,

1995). Silvopasture has the potential to not only

reduce phosphorus run-off but also to sequester additional carbon dioxide and improve habitat for wildlife

in the watershed.

3. Method and model specification

The theoretical construct of stated preference

choice experiment (CE) approach stems from discrete

choice analysis of consumer preferences. Random

utility theory provides the basis for CE valuation

method (McFadden, 1974). It is a rigorous approach

to estimate consumers’ willingness to pay for public

goods (Adamowicz et al., 1998; Hanley et al., 2001;

DeShazo and Fermo, 2002). The CE method utilizes

experimental design and repeated choice process in

value elicitation. Using CE valuation method, we

consider each of the environmental attributes of silvopasture in the watershed as an alternative j in a

choice set c. Alternative j represent one specific type

of consumption bundle which is an improvement in

the environmental quality of the watershed with its

conditional indirect utility level Vj for a household i

and is expressed as

Vij 1⁄4 vij þ eij ð1Þ

where vij is the deterministic component of the model

and eij is the random component. Thus, selection of

alternative j over alternative h implies that the utility

of Vij is greater than that of Vih. Overall, the utility is

random suggesting that one can only analyze the

probability of choosing one alternative over another.

The probability of an individual i choosing alternative

j, p() can be expressed as

pðijAcÞ 1⁄4 p1⁄2Vij > Vih 1⁄4 p1⁄2ðvij þ eijÞ > ðvih þ eihÞ;

j p h ð2Þ

Assuming the error terms of the utility function are

independently and identically distributed (IID) and

follow an extreme-value (Weibull) distribution and the

choice probabilities have a closed-form solution, they

are appropriately estimated using a multinomial logit

(MNL) specification (Adamowicz et al., 1998; Louviere et al., 2000; McFadden, 1974). The MNL model

represents the probability of choosing an alternative j

such that the utility of this alternative is greater than

the utility of all other alternatives. This probability

model can be represented as

pðijÞ 1⁄4 explvij

X

ijac

explvih

ð3Þ

where l is a scale parameter, which is often normalized to 1 for a particular application. Assuming vij to

be linear and an additive function in the attribute

vector, it can be represented as

Vij 1⁄4 lðb þ b1z1 þ b2z2 þ ... þ bnzn þ bas1 þ bbs2

þ ... þ bmsk Þ ð4Þ

R.K. Shrestha, J.R.R. Alavalapati / Ecological Economics 49 (2004) 349–359 351
where b is a constant term that can be partitioned into

alternative specific constants (ASC), and bn and bm

are vectors of coefficients attached to the vector of

environmental attributes z and vector of respondents’

individual characteristics s that influence utility.

A strong assumption implicit in MNL model is that

the independence of irrelevant alternatives (IIA) condition holds. This particular restriction in MNL model

implies that the presence or absence of an alternative

preserves the ratio of the probability associated with

other alternatives in the choice set (Louviere et al.,

2000). However, it is suggested that the MNL model

should be tested for IIA property using the following

Hausman and McFadden test to ensure that the

assumption is not violated (Louviere et al., 2000;

Hausman and McFadden, 1984),

q 1⁄4 1⁄2bu  brV1⁄2Xr  Xu

1

1⁄2bu  br ð5Þ

where u and r indicate unrestricted and restricted

models, b is a vector of estimated parameters, and X

is variance–covariance matrix for the estimates.

To avoid IIA restriction in the MNL model, one

could use less restrictive specifications such as random parameters logit (RPL) or mixed logit models

(Bhat, 1997; Revelt and Train, 1996). The RPL model

is specified as follows:

PðjAliÞ 1⁄4 expðaij þ hjzi þ ujgij þ bijxijÞ

X

J

j1⁄41

expðaij þ hjzi þ ujgij þ bijxijÞ

ð6Þ

where aij is a fixed or random alternative-specific

constant associated with alternative j or individual i,

uj is a vector of non-random parameter, bij is a

parameter vector randomly distributed across individuals (includes lij as a component), lij is the individual

specific random disturbance of unobserved heterogeneity, zi is a vector of individual specific characteristics, gij is a vector of individual and alternativespecific attributes associated with uj, and xij is a

vector of individual and alternative-specific attributes

associated with bij.

The subsets of alternative-specific constants (aij)

and the parameters vector bij can be randomly distributed across individuals such that a new parameter qki

for each random parameter can be defined as a function

of individual characteristics and other attributes which

are choice invariant. The functional form for qki can be

normal or lognormal. The parameter qki induces a

relatively free utility structure in RPL model such that

IIA condition is relaxed (Louviere et al., 2000).

Respondent’s WTP representing the compensating

surplus (CS) can be estimated using RPL model as

follows (Hanemann, 1984; Adamowicz et al., 1998;

Train, 1998),

CS 1⁄4  1

bc

ln XexpðbVx0

ij   ln XexpðbVx1ij h i 

ð7Þ

where bc is the marginal utility of income, which

represents the coefficient of the cost attribute in the

model. The xij

0 and xij1 represent the attributes at initial

state and after the change, respectively. A simplified

version of the above CS function for a marginal

change in environmental quality of a single site is

represented by the ratio of the estimated coefficient of

the attribute bj and the coefficient of the cost attribute

bc. This ratio is commonly known as part-worth or

utility representing the marginal value of a change in

the attribute, i.e., the marginal rate of substitution

between income change and the change in the attribute under consideration.

4. Experimental design and survey

4.1. Experimental design

Relevant benefit attributes of a good must be

identified in order to value environmental benefits

using choice experiment method. We identified important environmental benefit attributes of silvopasture from extensive literature review and discussions

with ranchers, other landowners, agroforestry professionals, and the general public. Field visits and focus

group discussions were conducted in the Range Cattle

Research and Education Center, Ona and Archbold

Biological Station, Lake Placid, Florida to obtain

input into the survey instrument design. We also

visited two ranchers (a small landholder and a large

landholder) in Sarasota, Florida currently practicing

silvopasture to discuss various attributes of this tech352 R.K. Shrestha, J.R.R. Alavalapati / Ecological Economics 49 (2004) 349–359
nology (Shrestha and Alavalapati, 2004). Drawing on

the above sources, we defined three levels in each of

the following environmental attributes: water quality

improvement, carbon sequestration (CO2), and wildlife habitat protection (Table 1).

The state utility tax was used as the cost attribute in

our experimental design. We used this as the payment

vehicle because Florida does not have the state income

tax commonly used in valuation surveys (Milon et al.,

1999). The utility tax is a form of utility bill that is

familiar to respondents and closely linked to the goods

valued in the survey (Cameron et al., 2002; Mitchell

and Carson, 1989). The tax attribute was detailed to six

levels (Table 1). We used an experimental design to

construct choice sets of these attributes and levels.

We followed an orthogonal main effect experimental design representing 33 x6x2 factorials. Following

the smallest orthogonal main effect plan we identified

12 pairs of profiles in two blocks using autocall

macros of SAS version 8 (Kuhfeld et al., 1994). The

application of these macros in the experimental design

helped control proliferation of profiles with nominal

effect on design efficiency. As the sample is drawn

from a general public not highly knowledgeable about

silvopasture technologies, we tried to keep our choice

sets at the minimum, reducing choice complexity and

the overall length of the questionnaire (DeShazo and

Fermo, 2002). In summary each respondent was asked

to value two options and a ‘status quo’ option in each

scenario and to continue the choice task with six

scenarios.

4.2. Survey instrument and administration

Several steps were taken in developing the survey

instrument. First, a map of the Lake Okeechobee

watershed was presented and the rationale for selecting the study area was given. Second, a brief description of the traditional ranching, water pollution issues

in the watershed, as well as potential environmental

benefits and costs of silvopasture practices were outlined in the survey. Color photos and drawings were

used to illustrate the silvopasture land-use changes.

Third, directions and an example of how to answer

survey questions were provided. Fourth, the respondents were given six choice tasks, each with two

options (A, B) and a status quo option (C), representing current condition of the Lake Okeechobee watershed, and asked to choose one of the options (Fig. 1).

The choice question was followed by a rating question asking respondents to rate their confidence level

in each choice task. Finally, the respondents were

asked to provide their socioeconomic and demographic information. The survey questionnaire was pretested with respondents from diverse educational

and demographic backgrounds. Based on the pretesting, the survey was revised to minimize technical

terms and reduce the length of the description. We

enclosed a glossary of technical terms used in the

questionnaire.

The survey sample was drawn randomly from the

households of 10 counties in south-central Florida,

namely, Glades, Hendry, Highlands, Martin, Okeechobee, Orange, Osceola, Palm Beach, Polk, and St.

Lucie. Sample design assistance was provided by

the Bureau of Economic and Business Research

(BEBR), University of Florida. The households

were identified using a random digit dialing approach and contacted to find if they would be

willing to participate in the survey. The initial

responses were categorized into several groups,

Table 1

Definition of silvopasture land-use attributes used for choice

experiment

Environmental attributes Level of change in environmental

attributes

1. Water quality Reduce phosphorus runoff

anywhere between 0 and 30%

Reduce phosphorus runoff

anywhere between 31% and 60%

Reduce phosphorus runoff

anywhere between 61% and 90%

2. Carbon sequestration Limited absorption of CO2 from

the atmosphere

Moderate absorption of CO2 from

the atmosphere

High absorption of CO2 from the

atmosphere

3. Wildlife habitat Limited improvement of habitats

for wildlife

Moderate improvement of habitats

for wildlife

High improvement of habitats for

wildlife

4. Increase in state utility tax

(per year for 5 years), US$

0, 10, 20, 40, 80, 120, 140

The first level of each attribute indicates the environmental quality

without silvopasture.

R.K. Shrestha, J.R.R. Alavalapati / Ecological Economics 49 (2004) 349–359 353
including complete agreement, soft refusal, strong

refusal, and other technical-related barriers.3 The

technical barriers consisted primarily of the respondent being unavailable and telephone number dialed

being owned by institutions or groups. We mailed

504 survey packets in February 2002, containing a

questionnaire, cover letter explaining the intent of

the survey, and a magnet sticker with School of

Forest Resources and Conservation and University

of Florida logos. Reminder post cards were sent to

individuals who had not responded within 2 weeks.

With second mailing and post card follow-ups we

received total of 152 survey responses. Thirty-four

surveys were undelivered and seven were incomplete, therefore the resulting response rate for our

survey was just above 32%. While the response rate

is relatively low in our survey, it is still within the

range of similar valuation surveys. Loomis et al.

(2000) reported a response rate ranging from 25.7%

to 41% depending the method of contacting

respondents.

5. Results and discussion

The demographic characteristics of the respondents revealed a majority of males (69%) with average

age about 58 years. Proportion of male respondents

in our survey is relatively higher compared to 49% in

a similar survey (in-person interview) by Milon et al.

(1999) and 47% in 1998 Florida census. Furthermore, respondents in our survey were relatively more

educated. Nearly 22% of respondents to our survey

had university degree, which was the case in only

10% in the Milon et al. survey and 6% in the Florida

census. The distribution of average household income also followed a different trend from previous

surveys. The average income value in our survey, for

example, was US$59,871, higher than both the

Florida census (US$38,819) and Milon et al.

(US$33,941). Household size, however, was very

similar at 2.4, 2.7, and 2.5 persons per household

3 Here, refusal implies the households’ unwillingness to

participate in any survey, but not protest against the valuation

research because very limited information about the research was

provided on the phone.

Fig. 1. Example of a choice set presented in choice experiment tasks.

354 R.K. Shrestha, J.R.R. Alavalapati / Ecological Economics 49 (2004) 349–359
in current survey, Milon et al., and the Florida

census, respectively. The differences in some of these

household characteristics may have been due to

seasonal variations in Florida’s population. Florida

has the nation’s highest net domestic migration, of

more than 1 million (US Census Bureau, 2000),

including seasonal or short-term immigration.

We initially specified a multinomial logit model

and tested for IIA restrictions using the Hausman and

McFadden test as specified in Eq. (5). The test results

indicated the violation of IIA assumption in MNL

model suggesting the use of a relatively non-restrictive model. Therefore, we estimated a random parameter logit model to relax the IIA assumption.4

Two levels of improvements in water quality,

carbon sequestration, and wildlife habitat are estimated in the model. Qualitative attributes in the model are

analyzed using effect codes, which allowed us to

estimate slope coefficients for the status quo or

excluded category of each qualitative attribute (Adamowicz et al., 1998; Louviere et al., 2000). For

example, two levels of the water quality variable

(WATER1, WATER2) are coded as ‘1’, whereas the

third level (WATER0) or the current level without

silvopasture is coded ‘  1’. Thus, the coefficient for

WATER0 is the negative sum of the coefficients on the

other two levels.

The signs and significance of the coefficients in the

model are found to be consistent as expected. All

slope coefficients on attribute variables are significant

at p < 0.10 and four attribute coefficients and one

coefficient on tax variable are significant at p < 0.01.

All attribute coefficients are positive suggesting a

positive utility of the environmental quality attributes.

The cost variable (UTAX) representing state utility tax

has negative coefficient as expected, implying a

higher tax reduces the utility of the environmental

quality improvement (Table 2).

The individual-specific variables were interacted

with alternative specific constant term (ASC). The

variable representing respondents’ association with

the ranch or dairy farm (RANCH) is positive and

highly significant indicating that the probability of

choosing the status quo, everything else held constant,

increases if the respondent is a rancher. This result is

expected because landowners would normally perceive that provision of public good would require a

change in their current practices, a decrease in land

productivity, and an increase in operating costs. The

coefficient representing respondents’ education level

(EDUCATION) is negative and highly significant,

suggesting the probability of choosing status quo is

decreased if the respondent holds a college degree.

This confirms our expectation that the respondents

with higher education place higher value on environmental benefits of silvopasture. The variable representing respondents’ membership in an environmental

organization (MEMBER) is positive and significant,

which indicates an increase in the probability of

choosing status quo if the respondent is a member

4 The results of basic MNL and extended MNL model with

socioeconomic variables can be obtained upon request.

Table 2

The random parameter logit model results

Variable Coefficient Standard error t-ratio

Parameter in utility function

WATER1 0.1181 0.0704 1.6763

WATER2 0.2778 0.0793 3.5035

CARBON1 0.2266 0.0822 2.7578

CARBON2 0.2448 0.0821 2.9824

WILDLIFE1 0.1939 0.0713 2.7181

WILDLIFE2 0.1603 0.0830 1.9304

UTAX  0.0039 0.0015  2.6390

INCOME  0.0008 0.0036  0.2134

RANCH 0.8896 0.4005 2.2210

GENDER  0.0526 0.1259  0.4177

EDUCATION  0.5475 0.1377  3.9765

AGE 0.0927 0.1445 0.6418

MEMBER 0.4846 0.2098 2.3097

ASC 0.2602 0.5245 0.4962

Standard deviations of parameter distributiona

sWAT1 0.0015 0.0565 0.0273

sWAT2 0.0062 0.0635 0.0975

sAIR1 0.0040 0.0651 0.0608

sAIR2 0.0019 0.0605 0.0318

sWILD1 0.0045 0.0633 0.0707

sWILD2 0.0029 0.0657 0.0442

sUTAX 3.7E  05 0.0009 0.0411

McFadden R2 0.10

Log L  693.87

N 2142

Socioeconomic variables are interacted with the alternative specific

constants (ASC). a The standard deviations of parameter distribution indicate

insignificance of the parameters as the source of heterogeneity

suggesting the source of heterogeneity in our RPL model results

could potentially be individual-specific.

R.K. Shrestha, J.R.R. Alavalapati / Ecological Economics 49 (2004) 349–359 355
of an environmental organization. For many environmental groups, paying for silvopasture may not be a

preferred option to ensure environmental protection.

Perhaps, purchasing environmentally sensitive lands

or formulating stringent environmental regulations

may be preferred ways to control pollution.5 The

variables representing respondents’ household income, gender, and age are not significant in the

model.

The implicit prices or part-worth utilities representing marginal value of the environmental quality improvement are derived. The WTP estimates for

moderate and high water quality improvement

through reduced phosphorus runoff are, respectively,

US$30.24 and US$71.17 (Table 3). Corresponding

estimates for moderate and high carbon sequestration

levels are US$58.05 and US$62.72. Similarly, the

WTP estimates for wildlife habitat improvements are

US$49.68 and US$41.06. Our WTP estimates are

within the range of values reported by Milon et al.

(1999). Using a stated preference approach, they

estimated household net WTP of US$59 and US$70

per year for hydrological and species restoration,

respectively, in south Florida.

The WTP estimates indicate a relatively smaller

value of high-level improvement in wildlife habitat

attribute, which may be due to non-linearity in

household utility function that is unaccounted for in

a simple two level attribute modeling.6 Overall, WTP

estimates from current to high-level improvement

increased at a decreasing rate suggesting quadratic

representation, a result consistent with Adamowicz et

al. (1998). The aggregate WTP values for all three

environmental quality attributes indicates a greater

value for high-level improvements (US$174.96) compared to moderate level improvement (US$137.97).

The coefficients for status quo or current level attributes are the negative sums of the moderate and higher

level attribute coefficients. We obtained coefficients

of  0.396,  0.471, and  0.354 for current levels

of water, carbon, and wildlife habitat, respectively.

Then, we estimated WTP values of US$  101.41,

US$  120.77, and US$  90.74 for water, carbon,

and wildlife habitat, respectively, with a combined

value of US$  312.92 for all three attributes. This

indicates that a loss of utility in terms of water

quality, carbon sequestration, and wildlife habitat

while maintaining status quo is even greater, thus

justifying the positive value of the environmental

quality.

We estimated 95% confidence interval around the

mean WTP values using 1000 draws from the distribution of the coefficients in the model (see Table 3).

Fig. 2 indicates that the difference between mean

WTP values for moderate and high improvements in

water quality is significant, as the two confidence

intervals do not overlap. However, the differences in

the WTP values for two levels of improvements in

carbon sequestration and wildlife habitat are not

significant.

5 Similar to many states in the US, Florida sponsored land

acquisition programs spending a cumulative $3.7 billion to acquire

environmentally sensitive lands in the state since 1972 (FDEP,

2001). 6 A relatively smaller WTP estimate for higher level of wildlife

habitat improvement raises concerns often discussed in valuation

literature about the internal consistency of the value estimates using

stated preference methods (Smith and Osborne, 1996). Fig. 2. Confidence interval of welfare estimates.

Table 3

Marginal willingness to pay estimate for environmental improvement (in US$ per household)

Environmental Value for environmental improvement

attributes Moderate High

Water quality 30.24 (19.63 – 40.86) 71.17 (53.41 – 88.93)

Carbon sequestration 58.05 (43.72 – 72.37) 62.72 (54.38 – 71.06)

Wildlife habitat 49.68 (38.08 – 61.28) 41.06 (35.41 – 46.72)

Numbers in parentheses are 95% confidence interval calculated

from 1000 draws from the distribution of coefficients in the model.

356 R.K. Shrestha, J.R.R. Alavalapati / Ecological Economics 49 (2004) 349–359
6. Conclusions

Many studies have suggested that silvopasture

provides environmental services such as water quality

improvement, soil conservation, carbon sequestration, wildlife habitat protection, and aesthetics. Since

these environmental services are largely public

goods, ranchers have little incentive to adopt silvopasture and produce them at optimum levels. Thus, it

is imperative to develop incentives to internalize

these externalities. In this study we generated key

information that helps develop incentive policies

based on public willingness to pay (WTP) for these

environmental services. The random parameter logit

model results indicate that an average household in

south-central Florida would pay US$30.24 – 71.17

per year for 5 years for water quality improvement,

carbon sequestration, and wildlife habitat protection

in the Lake Okeechobee watershed. The results

indicate that the WTP for a moderate level of improvement in these environmental attributes amounts

to US$137.97. With 1.34 million households in the

watershed, the total WTP for the environmental

improvement would be 924.40 million. When adjusted for the response rate of 32%, a lower bound

estimate can be US$295.81 million. Shrestha and

Alavalapati (2004) noted that the cost of silvopasture, as perceived by ranchers in Florida, is US$9.32

per acre per year. This implies that the annual opportunity cost of silvopasture adoption on 2.62

million acres of ranchlands in the watershed would

be US$24.41 million. Using the total WTP as a trust

fund, its annual returns can be used to compensate

ranchers for the provision of environmental services

through silvopasture.

On its own merits, silvopasture may be beneficial

for alternative land uses including sustainable forest

management, outdoor recreation, and ecotourism. For

example, recreational hunting leases represent a growing land use in southern US, which can be highly

compatible with silvopasture. Similarly, long-leaf pine

forest provides longer rotation age, thus can contribute

to sustainable land uses and better returns. Yet,

ranchers may find these benefits small compared to

the major fixed costs needed for initial establishment

of silvopasture.

Several issues warrant closer examination before

developing incentive policies to promote silvopasture

adoption. First, many potential incentive mechanisms

exist including information and extension services,

lump-sum payments on per acre basis, price premium

to reflect environmentally friendly beef production,

and cost-sharing programs. These schemes are not

uniform in terms of management efficiency and

social acceptability. Therefore, careful examination

is required in determining socially efficient and

acceptable schemes. Second, institutional arrangements for effective implementation of incentive

schemes must be explored. Collaboration with the

Florida Forestry Association, Florida Cattlemen’s

Association, and Florida Farm Bureau will be critical

in developing incentive schemes and their successful

implementation. Third, it is crucial to explore markets

for timber grown on ranchlands. Currently, markets

for pulpwood and sawtimber are weak in southern

Florida. In the absence of established markets for

timber, ranchers will perceive timber growing as a

liability. Finally, other compatible land uses along

with silvopasture, such as sustainable forest management, recreational hunting leases, and ecotourism,

should be taken into consideration. These land-use

opportunities will provide market-based incentives

for ranchers to sustain their traditional vocations,

while costing less to society than a direct payment

to compensate ranchers for their beneficial land-use

practices.

Acknowledgements

Ram K. Shrestha is a Postdoctoral Research Fellow

and Janaki R.R. Alavalapati is an Associate Professor

in the School of Forest Resources and Conservation,

Institute of Food and Agricultural Sciences, University of Florida. The authors would like to thank

Wiktor Adamowicz, John Loomis, Evan Mercer,

Warren Kuhfeld, and Joffre Swait for their valuable

comments and suggestions on our research design and

earlier drafts of this paper. We thank Kristina Stephan

and Andrew Stainback for helping us with the survey

development and administration. This research was

made possible by the financial support from the

USDA (Initiative for Future Agriculture and Food

Systems) and the Florida Agricultural Experiment

Station. Florida Agricultural Experiment Station

Journal Series R-09886.

R.K. Shrestha, J.R.R. Alavalapati / Ecological Economics 49 (2004) 349–359 357
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