Plantation development: Economic analysis of forest management in Fujian Province, China

Growing pressures on timber resources and increasing environmental awareness have generated the need to comprehensively analyze forest management in Fujian Province, China. Fujian is the most heavily forested province in China and experiences an unprecedented property rights reform and changes in investment in forestry by rights holders. This paper focuses on the net present value (NPV) and the internal rate of return (IRR) for projected financial performance of plantation management for five species in Fujian. Based on our data, Chinese fir offers the lowest internal rate of return on capital, but still a respectable NPV. Despite the long rotation (31years) masson pine returns are very high according to the NPV, because there are returns from thinnings and rosin for more than half the rotation period. Eucalyptus and bamboo offer the lowest NPVs, with high IRRs and short rotations they are well suited to planting by smallholders, and this has occurred widely. Some ecological and environmental issues are discussed according to calculation results of NPV and IRR in Fujian. Further, this should popularize the loblolly pine planting, so that species could play an increasing role. Based on the above studies, projected economic benefit to rights holders have been a powerful driver for private investment in forestry development. Property rights reforms, private investment, and demand growth have successfully fostered considerable investment in forest management in Fujian. In 2007 foreign investors initiated planting operations there. We believe management should pay more attention to forest layout and ecological issues. This would enhance forest sustainable development as well as promote further economic development, social progress and environmental protection. Fujian is one of China's key forest regions. In recent years, forest resources have been developed rapidly, with significant local benefits to employment and economic activities. To suggest ways to better promote forest development and improve management, this paper studies the projected economic performance of five of the most prominent species being planted.