Is enrichment planting worth its costs? A financial cost–benefit analysis

K. Keefe, J.A.A. Alavalapati and C. Pinheiro

Forest Policy and Economics, 2012, vol. 23, issue C, 10-16

Abstract: A strategy for enhancing natural forests' economic value is to increase their concentration of economically important, indigenous tree species by planting seeds or seedlings for future harvest, which can be accomplished with enrichment planting (EP). EP may help make forest management financially attractive and thereby reduce forest conversion to other uses but many factors deter landholders from EP, including a lack of reliable information about its costs and benefits. A financial appraisal of an eastern Amazon EP case study is presented with 7 alternate scenarios: high and low financial costs, low timber yield, carbon sequestration payments, higher timber prices, free seedlings, and reduced discount rates. A sensitivity analysis of carbon payment amounts, timber prices, and discount rates is explored. The net present value (NPV), internal rate of return (IRR), and benefit cost ratio (BCR) are reported for each scenario. Results showed that start-up costs must be kept low, and site maintenance must not only be sustained but also kept minimal to prevent costs from exceeding financial benefits of EP. Scenarios with the best NPV and BCR were those with carbon sequestration sales, higher timber prices, and a low discount rate. Carbon sequestration and high timber sale prices resulted in the best IRRs.

Keywords: Enrichment planting; Forest conservation; Financial benefit cost analysis; Net present value; Benefit cost ratio; Carbon sequestration (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:forpol:v:23:y:2012:i:c:p:10-16

DOI: 10.1016/j.forpol.2012.07.004

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