Teak–cattle production tradeoffs for Panama Canal Watershed small scale producers

Stephanie F. Stefanski, Xiangying Shi, Jefferson S. Hall, Andres Hernandez and Eli P. Fenichel

Forest Policy and Economics, 2015, vol. 56, issue C, 48-56

Abstract: Reforestation and forest conservation are important issues in the Panama Canal Watershed (PCW). Uncertainty remains about relative net benefits of profit-maximizing timber rotations compared to the net present value of incumbent land uses such as cattle ranching. The scientific and popular literatures have displayed enthusiasm for teak (Tectona grandis) and native species plantations. We estimate a realistic yield model for teak, an exotic tree species, based on growth data from actual small scale landholders who were incentivized to convert lands to teak plantations. We use a suite of well fit yield models to solve for the optimal Faustmann rotation and compute the net present value (NPV) of a teak plantation to a private land manager as a starting point for understanding land-use patterns. We compare the NPV from forestry to cattle and find that site characteristics, discount rates, and market prices are all important factors in influencing the land manager's decision to switch from cattle ranching to plantation forestry. We find that traditional cattle ranching is economically competitive, in terms of NPV, with and may often outperform teak plantations within the PCW. This result is robust to the teak yield model selected.

Keywords: Tectona grandis; Yield projection; Faustmann model; Cattle ranching; Landowner compensation; Ecosystem services (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:forpol:v:56:y:2015:i:c:p:48-56

DOI: 10.1016/j.forpol.2015.04.001

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