There are numerous studies on why farmers don’t plant, but the recent research findings by Laqiqige Zhu and Martha O’Hagan-Luff, Trinity College Dublin, offer a fresh perspective on this issue. Titled Applying real options theory to farmers’ afforestation decisions in Ireland, the paper provides analysis of why farmers hesitate to plant or don’t plant.

The findings are based on interviews with 24 Irish farmers – 19 men and five women – which took place between July and October 2024. What differentiates the TCD research from previous studies is the application of Real Options Theory (ROT) to their findings. ROT is especially relevant to forestry as it “emphasises that when investments are irreversible, uncertain, and long-term, the option to wait acquires real economic value”.

By applying the ROT framework the authors argue that “Irish farmers’ hesitancy [to plant] is not a policy failure to offer sufficient payments, but a logical valuation of the flexibility preserved by delaying”.

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Irreversibility

The study identified “irreversibility” as the main barrier to afforestation.

“Forestry was consistently described as an irreversible land-use change, binding both land and future generations in ways that sharply contrast with the flexibility of agriculture.”

The issue of mandatory non-commercial afforestation, which is now at 35% per planting unit, was seen as a long-term loss of income generation as farmers who plant are being “forced to provide a ‘public good [service], free of charge, indefinitely’ a proposition farmers found economically irrational”.

Uncertainty

Uncertainty was perceived as a major barrier to afforestation. Unsure future markets were cited, but State administration in licencing, policy shifts and institutional credibility loomed large.

For example, the forestry licensing system was described as “protracted, unpredictable and costly”, while policy shifts led to a mistrust of schemes that “could be changed, regardless of commitments already made”. Institutional credibility was emphasised especially in the handling of ash dieback by the Forest Service, which reinforced “perceptions that state institutions were unwilling to share significant risks”.

Inflexibility

“Compared with mainstream agriculture, land leasing and renewable energy projects, forestry appeared inflexible, uncertain, and financially inferior,” the study found. Tax-free leasing emerged as one of the strongest competitors to forestry, particularly in the context of dairy expansion.”

Add renewable energy projects including solar farms (€1,300/ac/annum), wind turbines (€20,000– €40,000 per turbine, per year) and the forestry option recedes as the alternatives “did not permanently reclassify the land, and thus maintained some degree of reversibility”.

Study recommendations

The study doesn’t rule out forestry as a land use option, but “many farmers expressed a desire to wait for improved forestry schemes, new markets, or institutional reforms before committing their land”.

This, the authors explain, is a rational decision “when commitments are irreversible and uncertainty is high”. The authors conclude by addressing three main barriers to afforestation.

  • Mitigating irreversibility: options explored included reversible contracts (lower subsidy with the right to exit after one rotation or a higher subsidy in exchange for permanence.)

    • Also communication strategies “should reposition forestry as ‘farming trees’ – a form of diversification rather than abandonment of agriculture”.

  • Reducing uncertainty: there is a need to establish “legally binding timelines for licence decisions or extend payments for longer-rotation species as well as index-linking of premiums to inflation”. The study also calls for “State-backed insurance schemes for pests, diseases, fire, and storm damage” to reduce risks that currently fall on forest owners.
  • Creating value now: the study recommends policy schemes “to ensure that forestry is more attractive today than the option of waiting for future markets or reforms” as the rational choice for farmers is to delay until new incentives such as carbon trading and biodiversity credit systems are introduced.

    • “To change this calculus, Government should accelerate the development of functioning ecosystem markets that provide farmers with tangible and tradable revenues. Equally, forestry supports should be bundled with other measures – such as renewable energy or organic farming schemes.

    Future research

    The study concedes that the sample of just 24 farmers has limitations. Future research could be extended to further address farmers unwillingness to plant as well as exploring Ireland’s land reclassification rules compared with EU member states. This might explain Ireland’s “persistent underperformance, relative to countries with more flexible frameworks”.

    Going native in Leitrim

    Woodlands of Ireland is celebrating 25 years of the Native Woodland Scheme (NWS) in the Oak Barn, Drumhierney Woodland Hideaway, Co Leitrim, on 8-9 October. The NWS was initiated by the Department of Agriculture, Food and the Marine (DAFM) in November 2001 to protect, restore and create native woodlands. The first day includes:

  • A retrospective of how and why the NWS came into being.
  • An insight into the experience of foresters and ecologists employing the scheme measures.
  • Future prospects for semi-natural woodland conservation and management.

    • The second day features field trips to sites where native woodland conservation and establishment measures are being applied. The fee for the two-day event is €60 for individuals and €120 for corporations. Check the Woodlands of Ireland website (www.woodlandsofireland.com/25-anniversary-nws/) for further details.

    Agroforestry in Roscommon

    The Irish Agroforestry Forum (IAF) is presenting a practical agroforestry training day hosted on Brian Costello’s farm in Boyle, Co Roscommon, on Tuesday 13 October. The event will feature a guided walk through the Costello farm, outlining “native species selection, implementation and practical livestock integration,” says Maureen Kilgore, IAF manager.

    There will also be presentations by Professor Jim McAdam, co-founder of IAF, Noel Kennedy, Teagasc, and DAFM inspectors. Further information is available on the IAF website (www.irishagroforestry.ie/), or contact IAF (info@irishagroforestry.ie). The event is free, but registration is required.