Economic Potential

The viability of local business cases is determined by potential income from the main competing activity: extensive cattle farming (typically 1 cow per hectare). This implies a relatively low opportunity cost for land.

 

The management concept for Secondary Forests focuses on optimizing the mix between commercial timber species and low production costs.

 

Business models are not focused on optimizing productivity per hectare but on minimising investments in manpower, road networks and other resources to produce commercial timber and rely on natural productivity. It is important to note that investments can be better timed to match income streams, i.e. road infrastructure to extract timber can be built when the first trees in the area are ready for harvest. Hence, cash-flow profiles of business cases can differ for plantations that require significant upfront investments.

 

The likely emergence of other income streams such as payments for ecosystem services and compensation for carbon sequestration are not part of core business model.

Example of a Project Level Cash-flow Profile Generating Positive income from year 2 onwards

Source: UNIQUE analysis of FCCF pipeline