Minimum required rotation age for get profit in small-scale forest

Author

Eduardo Sandoval

Scandinavian Forest Economics: Proceedings of the Biennial Meeting of the Scandinavian Society of Forest Economics, 8-11, issue 41

Abstract: Encouraged by international co-operations and private investment firms, farmers in the Bolivian lowland are incorporating small-scale forest plantations their productive system, for income generation from timber. Schizolobium parahyba, Eucalyptus spp. and recently Tectona grandis are mainly used because of their fast growth and potential to produce benefits within a short time horizon. However, issues such as economic return, market access, timing of thinning and productivity are still unknown. This study’s objectives are to discuss the economic fundamentals of plantation forestry with S. parahyba, using the land expectation value (LEV) (Faustmann formula). Growing functions are calculated using data from permanent plots established by the Agricultural Tropical Research Centre (CIAT). It considers sales at local market conditions. Optimal biological, optimal economic and minimum economic rotations are estimated. In addition, a sensitivity analysis with varying discount rate and stumpage price is made. The analysis demonstrate that the optimal biological, optimal economic and minimum economic rotation ages are 38, 23 and 13 years, respectively, but the last one could diminish to 6 years if the market accepted logs of smaller diameter. Increasing capital costs reduce the LEV value logarithmically, and increases in timber price shift up the LEV and reduce the rotation age.

Keywords: Bolivia; Schizolobium parahyba; small-scale forest plantations; maximising profit; minimum rotations.; Environmental Economics and Policy; International Development; Land Economics/Use (search for similar items in EconPapers)
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