Financial, Economic and Environmental Profitability of Reforestation of Imperata Grasslands in Indonesia
This study assesses the profitability of roundwood production in forest plantations established on Imperata grasslands in South Kalimantan, Indonesia.
Research Goals & Methods
This study uses the discounted cash flow method on the Riam Kiwa reforestation trial area. It also explores the importance of fiscal incentives to financial profitability of roundwood production in forest plantations established on Imperata grasslands.
Conclusions & Takeaways
The total establishment costs of a pulpwood plantation were US$840/ha which is lower than the standard costs of US$1000/ha applied by the government-supported timber estate projects. The study finds that reforestation can be very profitable when environmental economic impacts are taken into account, raising the value of an area from US$1000 to $2500/ha. The authors conclude that (1) a high mean annual increment can only be reached with intensive establishment and management; (2) roundwood price should be allowed to fluctuate according to demand and supply; (3) reliable estimation of the harvesting costs before starting a project is recommended; (4) an adequate prefeasibility study of a forest plantation should be a prerequisite for the investor before the government’s financing or other incentives are offered; (5) the government’s support should be provided according to the real costs; and (6) application of incentives is justified in economically, socially or environmentally profitable projects but not in financially profitable projects.
Financial, economic and environmental profitability of reforestation of Imperata grasslands in Indonesia. Forest Ecology and Management. 1997;99:247–259. doi:10.1016/s0378-1127(97)00210-7..
- Enso Forest Development Oy Ltd, Kuparintie, Imatra, Finland
- Enso Forest Development Oy Ltd, Reforestation and Tropical Forest Management Project, Banjarbaru, Kal-Sel, Indonesia