Potential Economic Impact of Improving Returns to Smallholder Tree Farmers in Leyte: A Cost Benefit Analysis of ACIAR Project ASEM/2003/052


Author(s): John L. Herbohn1 and Steve R. Harrison2

Abstract

This paper presents the results of a cost-benefit analysis of the likely impact of research project ASEM/2003/052 Improving financial returns to smallholder tree farmers in the Philippines funded by the Australian Centre Cot International Agricultural Research. Three main categories of project benefits are identified which coincide with short, medium and long-term outcomes, namely (1) increased returns to existing tree farmers from increased volume and higher quality of merchantable timber combined with higher stumpage prices flowing from improved market access (estimated to have a net present value of A$ 1.9 M), (2) increased returns to existing tree farmers from subsequent tree rotations due to increased volume and higher quality of merchantable limber from better management and higher prices (estimated NPV of A$ 1.22 M), and (3) expansion of the timber plantation area due to the higher returns available as a result of project outputs (estimated NPV of A$ 7.79 M). These estimated net present values suggest that the research project is a highly rewarding investment in economic terms.

Keywords : registered tree farm, market access, discount rate, timber quality, stumpage price

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