An Assessment of Financial and Economic Feasibility of Selected Forest Plantation Species

G.h Pitigala and H.m Gunatilake

Sri Lankan Journal of Agricultural Economics, 2002, vol. 04, 16

Abstract: The forest cover of the country has declined significantly and the remaining natural forests provide valuable environmental services. Since logging reduces the supply of environmental services, alternative sources of timber play an important role in sustainable management of forestlands. Forest plantations are alternatives to logging natural forests for timber and other wood products. The objective of this study is to examine the financial and economic feasibility of selected forest plantation species. According to the study, at a 10% discount rate, Mahogany, Teak, Jak and Eucalyptus result in positive financial NPVs. At higher discount rates, all considered species result in negative financial NPVs. Teak provides the highest financial NPV. In a social context, when environmental services are incorporated, Mahogany, Teak, Jak, Eucalyptus and Pine yield higher economic NPVs at 6% social discount rate. This shows that there is a divergence between financial and economic returns to forest plantations. Therefore, government interventions are necessary to get the private sector involved in plantation forestry.

Keywords: Agricultural Finance; Financial Economics; Public Economics (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:ags:saeasj:205929

DOI: 10.22004/ag.econ.205929

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