A Financial Cost-benefit Analysis of Forest Plantation for Restoration Program in Shan State of Myanmar

Abstract

Understanding the costs and benefits of plantations can provide a better way for resources management in restoration area. This paper focuses on the net present value (NPV) and the internal rate of return (IRR) and benefit-cost ratio (BCR) for financial performance of the plantations. A combination of secondary information survey method and field survey method for data collection was carried out in this study. On the basis of an annual discount rate of 10%, the results indicate positive NPVs, pure teak plantation would attain the highest BCR and the acceptable NPV, but its IRR is smaller than agroforestry practice due to the discounting effect of late return over a long investment period. Pure teak plantation is found to be most profitable following by agroforestry practice (teak and turmeric) and pine plantation. From a pure financial point of view, plantations should be encouraged but its long-term productivity and adverse ecological effects have to be taken into account. It also needs systematically calculation to obtain high-quality timber in the final harvest of forest plantations, but also to obtain large volume of timber to satisfy more economic benefits. The results provide valuable information for plantation policy for the government.