Value of Planted Forest
Attributes
Medium: Animals, Plants and/or Others
Country: Vietnam
Analytical Framework(s): Economic Analysis
Study Date: 2008
Publication Date: 2013
Major Result(s)
| Category | Resource/Environmental Good | VND, million per ha. (2008) |
VND, million per ha. (2014)1 |
USD, million per ha. (2014)2 |
|---|---|---|---|---|
| Households | NPV of E. urophylla3 | 16.00 | 23.65 | 0.00 |
| Households | NPV of A. mangium | 16.00 | 23.65 | 0.00 |
| Forest Enterprises | NPV of E. urophylla | 57.00 | 84.24 | 0.00 |
| Forest Enterprises | NPV of A. mangium | 62.00 | 91.63 | 0.00 |
About the Inflation Adjustment: Prices in Vietnam (VND) changed by 47.79% from 2008 to 2014 (aggregated from annual CPI data), so the study values were multiplied by 1.48 to express them in 2014 prices. The study values could be expressed in any desired year (for example, to 2025) by following the same inflation calculation and being sensitive to directional (forward/backward) aggregations using your own CPI/inflation data.
Study Note: The study applied a theoretical model of optimal forest management developed by Faustmann and by Tahvonen (i.e., multiple stand or forest-level model) to analyse real data from Vietnam. Should economies of scale exist, the study used the model of Tahvonen to analyse the actual data. Tahvonen's model does not include spatial arrangement among forest stands, while the model used in this study does. Results were used to make policy recommendations to further develop multiple-use forests in Vietnam.
Study Details
Summary: This research studied optimal forest management strategies when carbon sequestration is included, for E. urophylla and A. mangium in Yen Bai province, Vietnam. The Faustmann formula was applied to find the optimal rotation age and the NPV for planted forest at stand-level. The model was also extended to include multi-stands and spatial arrangement among forest stand in order to analyse the optimal strategy at the forest level. Survey results suggested that the actual tree cutting age is five years. However, it was found that, at the stand-level, the optimal rotation age of E. urophylla when only timber has market value is 10 and 9 years for households and forest enterprises, respectively, at a 5% discount rate. For A. mangium, the optimal rotation age is 13 years for both households and forest enterprises. The NPV is VND 16 million per hectare for households of both E. urophylla and A. mangium. For forest enterprises, the NPV is VND 57 million and VND 62 million per hectare for E. urophylla and A. mangium, respectively. Adding carbon values make the optimal rotation age slightly shorter and the NPV higher. The government can use a lump-sum payment of carbon benefits at the beginning of the rotation to encourage forest owners to lengthen the rotation age. Given that the majority of households cut their trees sooner based on their family's financial status, a planting cost subsidy would help to narrow the actual and the optimal rotation age. The study found that if the assumption of constant timber price is relaxed, it is optimal to grow large-sized timber.
Site Characteristics: Yen Bai is 180 km northwest of Hanoi with a total area of 688,630 ha, of which more than 70% covered by mountains and highlands. Yen Bai is characterised by a monsoon tropical climate with a mean annual temperature of 22-23°C, mean annual rainfall of 1500-2200 mm and mean annual humidity of 83-87%. Yen Bai is a major source of timber supply in northern Vietnam. The area of productive planted forest in Yen Bai is 116,000 ha, accounting for 59% of the total area and 6.9% of the total productive planted forest area in Vietnam. Nine state enterprises and 41,000 households are involved in forest plantations. In Yen Bai, 50% of the productive forest area is managed by the Commune Committee, 42% by households, and 7.6% by forest enterprises with that remaining belonging to other institutions. Planted forests are dominated by fast-growing trees such as Eucalyptus spp., Acacia spp., Styrax tonkinensis, Manglietia conifera, and Cinnamomun cassia Blume.
Comments: This applied the extension of the Faustmann model to find the carbon optimal rotation in planted forests in Vietnam. This research also investigated the impacts of spatial interactions among forest stands to carbon optimal rotation. In this context, spatial interactions were defined as the economies of planting scale. This implied an arrangement of forest stands in relation to stand ages, which could contribute to large harvested areas and, hence, large planted areas. As a result, it would help to reduce planting cost.