An analysis of potential investment returns of planted forests in South China

Abstract

Financial returns of forest plantations are an important concern around the world. In this research, we focused on South China's timber investments, collected data from the Pingxiang, Guangxi Province, China, which is the demonstration zone of Fast-growing and High-yielding Timber Plantation Base Construction Program and National Timber Strategic Storage and Production Bases Construction Program, and used capital budgeting analysis method and sensitivity analysis to compare different scenarios of planted forest management. The results showed that excluding land costs, (1) the financial returns of Eucalyptus forest managed by small business were excellent, having an IRR of 28% per year and a LEV of $7555 per ha, but it had a high risk with fluctuations of cost, timber price and timber yield; (2) the results for the Experimental Center of Tropical Forests indicate that the Eucalyptus forest and Castanopsis hystrix forest returns were greater than those for Cunninghamia lanceolata forest and Pinus massoniana forest, with having IRRs of 24%, 21%, 13% and 10% per year respectively. The mixed planted forest of Castanopsis hystrix × Eucalyptus and Castanopsis hystrix × Pinus massoniana had the features of high profits and low risks; (3) the forest farmers had lower levels of returns for Eucalyptus forest management in South China, but were still in the middle rank of global comparisons. This study gave a view of China's timber investment and provided more options of improving the economic returns of planted forest management to both small businesses and forest farmers in South China.

Economic Performance of Forest Plantations in Vietnam: Eucalyptus, Acacia mangium, and Manglietia conifera

“…Both the NPV and IRR values were smaller than our study, 40.27 million VND/ha, 31% with six year-rotation in the study of Maraseni et al, in 2017 [33] and 27.51 million VND/ha, 28.5% with five year-rotation in the study of Frey et al, in 2018 [34]. However, the NPV and IRR for Eucalyptus forest managed by farm households in the study area were the same as the Eucalyptus IRR in China (31% for IRR and 3505 USD/ha for NPV) [35] and more than those in Central of Vietnam (23.8% for IRR and 1408 USD/ha for NPV) [34,36].…”

Research trends: Forest investments as a financial asset class

“… 2.5 Colombia Pine spp. 4.1 New Zealand Pinus radiata 8.5 Sources: Beljan et al, 2020 ; Cubbage et al, 2020 ; Evison, 2018 ; Frey et al, 2018 ; Maraseni et al, 2018 , Maraseni et al, 2017 ; Pra et al, 2019 ; Ramírez et al, 2020 ; Watt et al, 2017 ; Zhang et al, 2019 ; NORSKOG, 2020 . …”

China-Europe Forest Bioeconomy: Assessment and Outlook

“…When it comes to pulpwood and products made of it, annual pulpwood production in China could increase considerably more than suggested by the trend. The 21 Mm 3 trend increase of annual pulpwood production by 2030 could be achieved by establishing one million hectares of southern eucalyptus plantations with 20 m 3 /yr mean annual increment (see Zhang et al, 2019). The eventual increase in pulpwood production in China will depend on the success of the new plantation programmes, on progress in making the existing plantations more productive, and possibly on allowing some harvesting of the planted regions classified as ecological forests, where these harvests do not harm ecological goals.…”

“…Making a purely hypothetical assumption that policies favouring wood construction would trigger a 10% increase in wood use per square metre (currently about 0.0171 m 3 ), wood use in construction activities would rise from the current 171 Mm 3 /yr to 216 Mm 3 /yr, given the foreseen increase in urbanisation and ensuing growth in annual new construction from the current 10 billion m 2 to 11.5 billion m 2 by 2030. Currently, sawnwood accounts for about 40% of the wood used in construction in China, 95% of that being softwood (Zhang et al, 2019).…”