Understanding adoption risks of peat-adapted agroforestry options in South Sumatra through decision analysis

Abstract Peatlands in South Sumatra, Indonesia, covering 24% of the region, are vital for local livelihoods and ecosystem services. Unsustainable cultivation practices threaten their sustainability through irreversible drying of the peat, increased greenhouse gas emissions and fire risks. Agroforestry practices, when adapted to peatlands, may offer multiple socio-economic and environmental benefits. This study evaluated the economic viability of two rice-based and three rubber-based agroforestry systems, designed by World Agroforestry for cultivated peatlands in South Sumatra, comparing them to monoculture baselines. Using decision analysis and probabilistic modelling, including Monte Carlo simulations, we conducted probabilistic cost-benefits analyses, accounting for risks and uncertainties and incorporating expert knowledge. Our model simulated decision outcomes under two scenarios—with and without considering family labour in the costs—to assess the impact of family labour on the outcomes. We identified key uncertainties affecting model outcomes through sensitivity analysis and value of information calculations. Our results showed that rice-based agroforestry systems require substantial establishment costs, mainly for constructing dikes to enable dryland crop cultivation. Despite these upfront costs, the two designed rice-based agroforestry systems offer the potential for higher net returns compared to rice monoculture, especially when family labour costs are excluded from the calculation. All rubber-based agroforestry systems demonstrate higher net returns in the long term compared to rubber monoculture in both family labour scenarios. Narrowing knowledge gaps related to key variables, such as the discount rate, crop yields, crop prices, risk event probabilities and rice yield losses, is important for supporting the decision-making process for rice-based agroforestry systems.