The economic relevance of sustainable agroforestry practices - An empirical analysis from Tanzania

•Evaluates the role of sustainable firewood extraction from agroforestry in terms of income•Between 14 and 41% of households practice sustainable agroforestry depending on the tree growth rate.•Land use rights, environmental awareness and age influence the sustainable use of agroforestry.•A poverty-environment trap regarding agroforestry utilization for the very poor is observed.

This paper investigates the economic relevance of sustainable behavior of agroforestry practices for smallholders using the example of firewood exploitation in rural Tanzania. Three questions are addressed: (1) To what extent do households behave sustainably regarding firewood extraction from agroforestry? (2) Which factors determine the likelihood of households practicing sustainable agroforestry? (3) Are sustainably behaving households better off in terms of income compared to households practicing unsustainable agroforestry? The analysis is based on cross-sectional data of 314 households. A sustainability indicator shows that the share of sustainable households varies between 14 and 41% depending on the underlying wood growth rate. The results of the logistic regression indicate that property rights regarding the ownership of agricultural land and environmental awareness increase the likelihood of sustainable firewood extraction. Empirical evidence from the quantile regression reveals that poorest households generate higher income if they extract firewood unsustainably. The opposite is true for households of upper income percentiles. Thus, the poor are likely to increase environmental degradation to generate more income causing a 'downward spiral' of the poverty-environment trap resulting in income losses in the long run. Households with a per capita income of 524 TZS or more manage their tree stocks sustainably.