Rice and Ward, 1996; Moguel and Toledo, 1999. Due to the structural and floristic complexity of
the shade trees, shade coffee plantations can re- semble the original forest and harbor relatively
high biodiversity Perfecto et al., 1996; Moguel and Toledo, 1999. Evidence suggests that shade
coffee plantations help preserve biodiversity and deserve protection Aguilar Ortı´z, 1980; Williams
Linera et al., 1995; Moguel and Toledo, 1996; Perfecto et al., 1996; Toledo and Moguel, 1996;
Wunderle and Latta, 1996; Greenberg et al., 1997; Perfecto et al., 1997; Moguel and Toledo, 1999.
In spite of their potential as refugia for biodi- versity, a trend is underway in northern Latin
America Colombia, Panama, Costa Rica, El Sal- vador, Guatemala, Nicaragua, Honduras, and
Mexico for coffee producers to convert from shade coffee plantations to reduced or non-shaded
coffee plantations. Initially, the transformation was a response to the appearance of coffee leaf
rust Hemileia 6astatrix in Brazil and Central America during the 1970s Perfecto et al., 1996.
The recent tendency, however, appears to be mo- tivated by higher coffee yields per hectare, since
yields of reduced or non-shade coffee plantations are frequently higher than those of shade coffee
plantations Perfecto et al., 1996; Rice and Ward, 1996. Recent estimates indicate that about 41
of the 2.7 million ha devoted to coffee production in northern Latin America have been converted to
reduced or non-shade coffee plantations Rice and Ward, 1996.
From the standpoint of conserving biodiversity, it is imperative to devise strategies to redirect the
ongoing trend toward the simplified shade indi- cated above to biologically more diverse shade.
Recently, a project has been launched in El Sal- vador
to conserve
biodiversity through
the maintenance and enhancement of habitats within
shade coffee plantations. Among the several ob- jectives associated with the project are the promo-
tion of biodiversity-friendly cultural practices and the development of a market for a certified ‘biodi-
versity-friendly’ coffee Oliver Komar, 1998, per- sonal
communication. Of
great interest
is whether the adoption of a certified ‘biodiversity-
friendly’ coffee production system may provide financial returns to act as an incentive to the
farmers to retain the forest cover or increase the density of shade trees in their coffee plantations.
To this end, this paper considers the financial viability of investing in the certification criteria of
a ‘biodiversity-friendly’ coffee under different pro- duction systems in western El Salvador. The ob-
jective of this study is to explore the effects of adopting the biodiversity-friendly certification
criteria on the financial performance of coffee plantations. Information generated through the
models is of potential interest not only to coffee farmers but also to government agencies in charge
of environmental matters and institutions related to the coffee sector. Policy issues of current inter-
est include the development of strategies to con- serve forest cover and biodiversity and to make
the coffee sector more environmentally sound. The results reported here can improve the back-
ground on which to base related policy decisions. Furthermore, given that throughout northern
Latin America coffee plantations share many of the features described in this study, this analysis
can provide some insights for adopting the biodi- versity-friendly certification criteria in other coun-
tries of the region as well.
2. Coffee production systems in El Salvador
Coffee production and exportation play a prominent role in the economy of northern Latin
American countries where it is the leading source of foreign exchange Perfecto et al., 1996. In El
Salvador, coffee is the most important agricul- tural export commodity representing 30 of the
country’s total exports Pe´rez, 1996. Coffee is also an important generator of employment, en-
gaging approximately 15.5 of the economically active rural population Pe´rez, 1996. There are
around 20 000 coffee farms that cover 196 000 ha or 9 of the country Direccio´n General de Eco-
nomı´a Agropecuaria, 1996. Coffee plantations are located on the volcanic coastal range at alti-
tudes between 300 and 1800 m. Of the two com- mercially important coffee species, Coffea arabica
and Coffea robusta, only the former is cultivated in El Salvador. About 80 of the arabica varieties
grown in the country are Tipica and Bourbon,
which produce 3 – 4 years after planted and have an economic life between 20 and 30 years Gal-
loway and Beer, 1997. Coffee is cultivated under several structurally
different production systems in Latin America. These systems conform a continuum from the
more traditional ones, with higher diversity in the structure and composition of the shade canopy, to
those with reduced shade and intense manage- ment Moguel and Toledo, 1996; Perfecto et al.,
1996; Rice and Ward, 1996. Following a classifi- cation developed in Mexico using shade levels and
management as indicators for intensification, we can distinguish five coffee production systems:
rustic R, traditional polyculture TP, commer- cial polyculture CP, technified shade TS, and
unshaded monoculture SUN, the first two classified as ‘traditional’ and the last two as ‘mod-
ern’ Fuentes Flores, 1979; reviewed by Moguel and Toledo, 1996 Fig. 1. In El Salvador, it is
possible to recognize these five systems, although the rustic and SUN systems are not important in
the extent of production. The tendency to mod- ernization has been more significant in farms
greater than 35 ha, while in smaller farms the traditional and commercial polyculture systems
are predominant.
As shown in Fig. 1, in rustic systems, coffee is grown under the shade of a natural forest where
the understory has been replaced by coffee shrubs but the native forest canopy remains more or less
intact. This system is the less intensive one, affect- ing minimally the composition and structure of
the original forest. Farms under rustic system are rare in El Salvador. The traditional polyculture
system resembles the rustic system in structure, but has a greater diversity due to the deliberate
planting of economically valuable shade tree spe- cies by the farmer. This system is generally com-
mon in farms less than 15 ha located in the lowlands between 500 and 800 m. In commercial
polyculture, the shade trees are mostly planted rather than remaining from the original natural
forest. Citrus, banana, avocado, and wood for timber are planted as alternative commercial
products. This system is common in farms less than 15 ha distributed up to 1200 m.
When the original forest has been entirely re- moved and replaced with a few tree species usu-
ally Inga spp. to provide shade to the coffee bush, it is called a technified shade system. Under
this system, coffee plantations have a controlled appearance and the density of the shade trees is
low with considerable gaps between them. The density of shade trees follows an indirect relation-
ship with the altitude where the farm is located: the higher the location of the farm, the lower the
density of shade trees. This system is predominant among farms greater than 35 ha and located at
more than 1200 m. In the unshaded monoculture system, the coffee plantation is exposed to full
sun, and the land is completely stripped of all shade trees. The SUN plantations resemble tightly
packed hedgerows and the coffee plant produces high yields, but the system is highly dependant on
chemical inputs. SUN coffee plantations require elevated initial investments and are costly to
maintain, which make them financially vulnerable to market swings. This system is uncommon in El
Salvador and the area covered is limited. Farms with SUN production systems are only found at
more than 1200 m in El Salvador.
3. What is a ‘biodiversity-friendly’ coffee plantation?
