Assessing the economic, social and environmental potential of wild and domesticated olive growing options in a far Western District of Nepal

CONTEXT: Climate change and extreme weather events undermine smallholder household food and income security in many rural areas of developing countries. Nature-based solutions and the use of climate resilient and nutrient dense Neglected and Underutilized Species into the local farming system have been claimed to sustainably help farmers adapt to climate change and to manage risk more effectively. OBJECTIVE: This paper investigated the potential implementation of three options based on the collective cultivation and management of olive groves and wild forests for production purposes in a mountain region of Nepal. The analysis was aimed at assessing the potential benefits of such strategy in comparison with the status-quo. METHODS: The study conducted an ex-ante simulation exercise for evaluating three options: 1) 1500 ha of new and restored wild forests; 2) 500 ha of olive groves; and 3) A combination of option 1 and 2. We calculated the financial, economic, social, and environmental costs and benefits of such options using agricultural and economic data collected from representative households identified from a sample of 31 small, 9 medium, and 3 large farm households. To conduct the economic, social and environmental analysis (ESE), we calculated the Social Return on Investment and we integrated it into the economic analysis. Then we compared the results to assess which was the most profitable option. RESULTS AND CONCLUSIONS: The results of the analysis showed that all three proposed options are stable with an Internal Rate of Return always above 27% with values over 100%. The greatest increase in terms of NPV is observed when shifting from the financial to the ESE analysis in options 1, 2, and 3 (+397.5%, +132.0%, +187.2% respectively) as the benefits increase more than the costs. The results further suggested that the integrated option is the most profitable one also in terms of labour generation. Indeed, we observed a substantial increase in the Return to Labour indicator especially in the ESE analysis (from 1.9 in the financial analysis to 2.8 in the economic analysis to 6.0 in the ESE analysis). SIGNIFICANCE: This study provides evidence of the potential that similar strategies based on the use of local resources and species, if properly designed, implemented and managed, may have to restore the ecosystem and enhance the livelihoods of local communities. The most innovative element of this study is the proposed ESE analysis, which takes into account the social and environmental dimension besides the economic one.