A Cost - Benefit Analysis of Substituting Bamboo for Tobacco: a Case Study of Smallholder Tobacco Farmers in South Nyanza, Kenya

Abstract

This study examines the benefits and costs of f arming bamboo as a substitute for tobacco in South Nyanza, Kenya. Using primary data, the study applied the framework of cost benefit analysis to analyze the cost and benefits of both tobacco and bamboo. In this study, the costs and benefits for the year 2006 - 2007 and 2009 - 2016 were extrapolated using the data for bamboo for 2008. The data for tobacco for 2006 was used to estimate the costs and benefits for tobacco from 2007 - 2016. Results of the base scenario showed that bamboo farming is financially and economically beneficial to tobacco farmers since the incremental benefits are positive. This is shown by the results which indicate that whilst the financial net present value for tobacco farmers is KShs 155,445 that of bamboo farmers is KShs 663,272. A sensitivity analysis showed no change in the sign of the net incremental benefit. The study concluded that b amboo farming therefore, if well managed can meet the objective of the F ramework Convention on Tobacco C ontrol and also the government as it seeks to find an alternative to tobacco growing. Th e study therefore recommends that Bamboo be introduced as an alternative tobacco growing areas.