Financial Analysis of the Use of Land: Agriculture or Woodlot

Jacqueline Ninson, Irene S. Egyir, Akwasi Mensah-Bonsu and Edward Ebo Onumah
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Jacqueline Ninson: Department of Agriculture Economics and Agribusiness, College of Basic and Applied Science, University of Ghana, Legon-Accra P.O. Box LG 25, Ghana
Irene S. Egyir: Department of Agriculture Economics and Agribusiness, College of Basic and Applied Science, University of Ghana, Legon-Accra P.O. Box LG 25, Ghana
Akwasi Mensah-Bonsu: Department of Agriculture Economics and Agribusiness, College of Basic and Applied Science, University of Ghana, Legon-Accra P.O. Box LG 25, Ghana
Edward Ebo Onumah: Department of Agriculture Economics and Agribusiness, College of Basic and Applied Science, University of Ghana, Legon-Accra P.O. Box LG 25, Ghana

Land, 2022, vol. 11, issue 5, 1-15

Abstract: Agriculture is the main driver of deforestation. In other to reduce deforestation, a viable alternative livelihood strategy, aside from agriculture, must be in place to provide a sustainable income for investors. Managing forests for sustainable production (the forest economy) has been suggested as an alternative for sustainable land use practice. In the current study, we undertook a comparative analysis of woodlots and agriculture. The profitability of agriculture and woodlot production in Ghana was compared using a profitability model. We looked at profitability in terms of Net Present Value (NPV) and the Benefit-Cost Ratio (BCR) of three regions in Ghana, namely, Ashanti, Bono-East, and Western Regions. We found that woodlot producers with contractual relationships with the Forest Commission and other forestry companies produce the highest Net Present Value (NPV) and Benefit-Cost Ratio (BCR). However, this profitability is marginally higher than that of agriculture, which gives a fixed yearly return. This means woodlot production may not be a panacea to reducing agriculture in Ghana.

Keywords: agriculture; woodlot; profitability; deforestation; land use (search for similar items in EconPapers)
JEL-codes: Q15 Q2 Q24 Q28 Q5 R14 R52 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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