Browsing by discipline "Forest economics and marketing (Forest Business Economics)"

In this study the financial returns related to smallholders’ return on investments in Eucalyptus globulus (Labill.) were analyzed for the Kentai sub-watershed in the Tana-Beles Watershed Monitoring and Evaluation project in Amhara Regional State, Ethiopia. This was accomplished by reviewing the inputs used in activities carried out by smallholders. A cross-sectional survey was conducted to analyze the inputs and outputs realized by different household investment choices. The Net Present Value (NPV), Equivalent Annual Income (EAI), Benefit-Cost Ratio (BCR), and Internal Rate of Return (IRR) of investments were estimated. The NPVs ranged between -65,750 Br/ha (-2,670 €/ha) and 1,389,920 Br/ha (56,350 €/ha) over a 30-year period at interest rates of 10, 20 and 30%. The EAIs corresponded with the NPVs, and were used in comparison with agricultural crops. In almost all cases EAI of E. globulus exceeded that of other crops. BCRs varied from 0.13 to 118 at an interest rate of 10%. The maximum IRR achieved was 383% and the minimum was ?4%. The average IRR was 60%. Additionally, the financial returns for revenue from sales, cost savings from household consumption and reinvestment were analyzed in five scenarios. Reinvestment in rental homes proved the most lucrative return, followed by use of poles for home construction, for fuelwood consumption, and, finally, only for sale. Additional use of wood at home or reinvestment of earnings was more profitable than only selling poles on the local market. The study found that most households have profitable financial returns from investment in E. globulus. Those households with negative returns may plant for non-monetary benefits or carry out non-profit maximizing behaviour due to personal, cultural, or other reasons not captured in this analysis. It is believed that continued adoption of E. globulus will plateau in the near future. This study suggests a number of measures that could be implemented to increase returns and reduce costs including: co-operative development, recognition of smallholder plantations by government, and tenure security improvements.