Economic Analysis for Beneficial Tree Plantation

Tree planting is being a long gestation venture, where heavy costs are incurred in initial years and benefits are realized after many years. In this situation one cannot go for comparing benefits and costs until they are discounted and brought to a common year say at the beginning of the plantation project. For this purpose benefit-cost ratio analysis and net present worth analysis was done assuming a guiding rate of return equal to banks rates. Benefit-Cost Ratio (B-C ratio) of plantation was calculated by dividing the net present benefits by the net present costs of plantation of a particular site. The Net Present Worth (NPW) of plantation on the other hand, was calculated by subtracting net present costs out of net present benefits. However, the environmental and social benefits of trees were not incorporated in the Benefit-Cost analysis. The net present benefits and net present costs are calculated. Any plantation project is beneficial or worth establishment if the corresponding net present value comes to be positive or benefit cost ratio more than one. The monetary value of various benefits both in terms of lopping as well as final harvest were procured from the local villagers, resource persons, timber merchants etc. Since fuel wood is collected from the plants by yearly lopping by the villagers, so its valuation was done on the basis market price. Fuel wood, fodder was also collected from the plants by yearly lopping. The tree leaf fodder was valued on the basis of prevalent market price of fodder. Timber of different species was valued on the basis of average sale price of a tree of given age and species minus value of fuel wood, pole, fencing material etc. obtained from that tree. Species have not been included in the valuation of timber if it is not harvested for wood supply. People for their own use may collect some of seeds, fruits, grasses, without making any monetary payment. The market value of the products, which are collected without any monetary payment, needs to be assessed. For economic analysis purpose, the prices prevailing in the nearby markets can be used after adjusting them for other costs. Plantation will also improve fertility of soil. The quality of soil that has been put under tree cultivation improve due to control on open grazing, fixation or uptake of nutrients by trees, decay of grass and fallen tree leaves, adoption of various soil conservation and water harvesting measures, etc. In order to assess the impact of tree plantation on soil quality a ‘with or without’ approach is very good. The quality of soil in the protected plantation area can be compared with the adjoining outside area, which is used for open grazing and other needs of the villagers. Improved in soil fertility could calculated on the basis of cost of manure required to achieve the existing fertility.