An economic evaluation of agroforestry, forestry and agriculture projects in Orissa, India : with particular reference to financial profitability and basic needs fulfilment
The focus of this study is Orissa state of India. Socio-economically, Orissa is Characterised by mass poverty and an inadequate level of development, particularly in rural areas where the overwhelming proportion of the population lives. Nearly half of the total land area is degraded and half of the total population are below the poverty line. With the objectives of tackling the problems of poverty (to meet basic needs) and land degradation, the government of India has taken a number of nation-wide initiatives, one of which is the Social Forestry Programme. An important plantation component of the SOcial Forestry Project in Orissa is Forest Farming for the Rural Poor (FFRP). FFRP is targeted at the landless rural poor towards meeting their basic needs by establishing agroforestry and forestry on degraded land. This study aimed to undertake an ex-post financial evaluation, basic needs evaluation and evaluation of the factors determining the profitability in agroforestry and forestry projects of the FFRP and that of agriculture in the ERRP (a similar initiative focusing on agriculture on degraded land) based on field data. These data were gathered through a household survey of 210 participants amongst the three projects covered under three agro-ecological zones of the state. Financial evaluation was carried out using FCBA. But for basic needs evaluation, CBA was found unsuitable mainly because it is based on the growth strategy or its variant -redistribution with growth- strategy, which differs drastically from the basic needs strategy. Thus the existing approaches developed for evaluation of projects within the basic needs strategy were reviewed. Nair's basic needs approach was found appropriate because it takes into account both the product and factor mix which are two essential components under the basic needs strategy. Nair's approach was then refined based on field data. iii The evaluation results of the three projects indicate that agroforestry Is the best project in terms of both financial and basic needs impacts followed by forestry and agriculture. However, on average, the baSic needs fulfilment varied between 37% from agroforestry and 11 % for agriculture. Slightly higher finanCial profitability and basic needs fulfilment in agroforestry in comparison to forestry is mainly due to additional income from agricultural crops, higher growth of trees and higher survival percentages of trees. Substantially lower profitability in agriculture in comparison to agroforestry and forestry is due to the absence of tree components and poor yield of agricultural crops due to the degraded land being particularly unfit for such crops. Amongst the agra-ecological zones, the Northern Zone ranks highest in terms of financial profitability and basic needs fulfilment followed by the Coastal Zone and the Central Zone. The zonal variation in profitability is due to the variation in agra-climatic as well as socia-economic factors. Determinants of profitability apart from technical and agra-climatic factors appear to be such socia-economic factors as caste, literacy, occupation, income and awareness. Although the CBA and basic needs analyses give Similar results in this context, this will not necessarily always to be the case. The basic needs analysis explained here is an appropriate method when basic needs fulfilment is a major objective. Initiatives on the part of the government or project agencies to enhance the performance of such projects are suggested. These are to focus the selection of beneficiaries more carefully, to enhance literacy and awareness amongst the project's participants and also to design a more appropriate technical model. Although the agroforestry project appeared to be the best of the three in terms of both financial profitability and baSic needs fulfilment technical i~provement ~o the design and husbandry of the system may well be POSSibl~ thus improv~ng the effiCiency of t~e policy instrument at the beneficiary level. In particular, more work IS needed at a technical level in collecting bia-physical data describing both the tree and understorey productivity at a range of alternative spacings.