Forest Plantations in the South: Environmental-Economic Evaluation

Abstract

Forest plantations in the South have received much attention during the last few decades after the environmental impacts of deforestation — e.g. carbon emissions — have become a world-wide issue. Forest plantations have recently been discussed and considered as promising in the active stabilization of carbon dioxide balance of the atmosphere. Traditionally, the rationale of forest plantations in many developing countries has been focused on efficient wood production and economic return on invested capital. Environmental impacts — or other external effects — have received less attention in economic analyses, although they may have vitally affected the economic reasoning of forest plantations. In this article, environmental-economic valuation techniques in a cost-benefit analysis framework are discussed, and a case study of the evaluation of the environmental-economic profitability of acacia plantations in the Philippines is presented. According to the case study findings, economic evaluation of the environmental impacts improved the economic profitability of forest plantations by 20—90%. Especially important for the improvement were the benefits in carbon sequestration, and benefits in erosion control, particularly on steeply sloping sites. Costs of nutrient loss in harvesting were much less significant. Although few environmental impacts were valued, the tentative results indicate that the evaluation of environmental impacts may substantially change the economic profitability of plantation forestry, and explicitly demonstrate the economic importance of the intangible environmental effects.