Incorporating soil carbon into economic assessments increases the profitability of cacao agroforestry systems

ABSTRACT Recognizing soil carbon stock as an ecosystem service in cacao-based agroforestry systems (AFS) is essential to sustainable agriculture. It facilitates access to carbon credit (CC) markets and offers financial incentives. This study aimed to: (1) estimate the production costs and revenues of crops in three cacao-based AFS, cacao-cabruca, cacao-erythrina, and cacao-rubber, while incorporating the added value of soil carbon stock; and (2) analyze their profitability with and without accounting for CC. The economic assessment took into account revenues from cacao and latex (in the cacao-rubber), as well as income from stored soil carbon. Various indicators, such as net present value (NPV), internal rate of return (IRR), equivalent annual value (EAV), and benefit-cost ratio (B/C), were calculated, together with a sensitivity analysis. Both cacao-cabruca and cacao-erythrina showed negative cash flow until the eighth year without the inclusion of CC but became profitable when CC were factored in. The cacao-rubber was identified as being the most profitable, yielding approximately US$ 20,000 without CC and US$ 26,944 with them. A comprehensive financial analysis utilizing multiple indicators proved vital for evaluating long-term profitability and addressing uncertainties. The inclusion of CC was particularly effective in offsetting early-stage financial deficits. Additionally, cacao prices and labor costs emerged as key determinants of economic performance. It is important to view labor costs not merely as expenses but also as drivers of rural development, as they contribute to employment, income generation, and social stability in cacao-producing regions. These findings underscore the strategic importance of incorporating ecosystem service valuation into agricultural planning.