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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.