TEAK PLANTATIONS IN NILAMBUR - Kerala Forest Research Institute

4. PROFITABILITY OF TEAK PLANTATIONS
In this section, a financial cost benefit analysis is done for teak plantations in
the government forests. Using the average costs and returns per ha, the
results of the profitability analysis for plantations with mean, low and high
yield are presented. All cost and benefits are estimated on the basis of 1995
current prices.
4.1. Cost of cultivation and valuation of outputs
Costs includes expenditure on planting, maintenance, thinning and final
felling in different years. As plantations are raised in government forest lands
no land costs are considered. Under the National Forest Policy, opportunities
for other land uses such as agriculture or non-forest plantation crops do not
exist in forests. Therefore no opportunity costs for land are included. Similar
studies have also avoided valuation of opportunity costs of replacing natural
forests with plantation (for eg. see Nair, 1977). Some public sector
corporations which have already leased-in forest lands to raise rubber and
other plantation crops are charged an annual land rent of Rs. 1300 per ha.
The profitability analysis is carried out under three options: (1) without land
rent, (2) with land rent of Rs. 1300/ha and (3) with land rent of Rs. 2500/ha.
There is certainly an opportunity cost in converting mixed natural forests into
monoculture plantations. In the long run, due to removal of other species in
weeding operations, biodiversity will be reduced. The timber, firewood and
non-wood forest products that would have been available if the natural
forests were managed on a sustainable basis would not be available from a
teak plantation. Aesthetic value of a teak plantation is also lower than a
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