Comparative analysis of managing plantation forests: The case of keeping plantation forests for carbon credit and industrial profits in Oromia Region, Ethiopia

Abstract

Community-based organizations (CBOs) and individuals primarily engaged in forest management dedicated to carbon credit run both at national and regional levels. After a span of time elapsed in the same, CBOs and individuals aspired to shift the carbon-dedicated forest either into log or timber production based on an informed decision. However, there is no study done so which of these projects is financially more useful to them to make an informed decision. The objective of the study is, therefore, to make comparative analyses of plantation forests for carbon credit, round log and timber. The result has revealed that plantation forest managed for timber production is most attractive and rewarding in year 10 and year 15 both with and without discounting at 3%. Plantation forest managed for timber production enables the creation of a fixed asset than both carbon credit and log production. Plantation forests managed for the carbon credit, log production and timber production have externalities both positive and negative which must be considered while calculating the costs and benefits accrued thereof. There are existing and emerging risks associated with the carbon credit project which shifts from natural (forest) to technological abatement of climate change. The study is critical to understanding the benefits of future plantation forest investment. We, thus, conclude forest managed for timber production is financially more useful for CBOs and individuals than round log and carbon credit. We recommend CBOs and individuals to have adequate information on benefits and risks associated with plantation forests managed for carbon credit, round log and timber production before engaging in the investment.

Keywords

• Carbon credit
• Comparative value of carbon
• Log production
• Plantation forest
• Timber production