A Potential PES Mechanism for Agroforestry-Led Industrial Wastewater Remediation Using Short-Rotation Trees

Urban Farm DB summary

This study examines the potential for industrial wastewater remediation through agroforestry in a peri-urban farming region of India. Under a payment for ecosystem services (PES) mechanism, farmers are incentivized to convert farmland into poplar-based agroforestry and use industrial effluent to irrigate the trees, with income from poplar timber sales enhancing the mechanism's attractiveness. A dynamic optimization model compares farmers' optimal land use allocation to a socially optimal case, and compares the firm's effluent discharge outcomes to an alternative arrangement in which it is fined for discharging untreated wastewater without the agroforestry remediation option. The results support the attractiveness of such PES mechanisms in addressing industrial effluent discharge while simultaneously mitigating water scarcity through wastewater reclamation. The optimal tax level required to achieve complete effluent treatment is several times higher than PES payment levels. The incentive to convert farmland to poplar plantations increases with higher PES payments but declines as the profitability of agricultural crops rises.