A Financial Analysis of Small-Scale Tropical Reforestation with Native Species in Costa Rica

A Financial Analysis of Small-Scale Tropical Reforestation with Native Species in Costa Rica

Background

This article describes the financial expenses and revenues incurred by the 15th year of a small native species plantation in Costa Rica.

research goals & methods

Forecasting models incorporate growth patterns, production costs, and wood prices to determine the net present value and internal rate of return for the project.

conclusions and takeaways

Expenses after 15 years of plantation operation inlude: full-time labor (52%), establishment materials (24%), management fees (11%), vehicle costs (4%), equipment purchase (3%), felling/hauling/drying (2%), building construction/maintenance (1%), milling equipment (1%), accountant/attorney fees (1%), and part-time labor (1%). Estimates show that the project can provide a 7.37% rate of return when including labor costs, and a 16.4% return if the owner provides their own management and labor. The plantation proved profitable, though its small size limits ths profitability.

Reference: 

Streed E, J. Nichols D, Gallatin K. A Financial Analysis of Small-Scale Tropical Reforestation with Native Species in Costa Rica. Journal of Forestry. 2006;104:276-282. doi:10.1093/jof/104.5.276.

Affiliation: 

  • US Agency for International Development, USDA Foreign Agricultural Service, Washington DC
  • Sustainable Forestry Program, School of Environmental Science and Management, Southern Cross University, Lismore, New South Wales, Australia