Economic impact of payment of carbon credits and environmental services in forestry investments in the Caribbean region of Costa Rica

Abstract

Fonseca, W., Navarro, G., Alice, F., Rey-Benayas, J.M. 2012. Economic impact of payment of carbon credits and environmental services in forestry investments in the Caribbean region of Costa Rica. Ecosistemas 21(1-2):21-35

The goal of this study is to estimate the economic efficiency of the investment associated with forest restoration processes through the establishment of forest plantations (Vochysia guatemalensis and Hieronyma alchorneoides) and natural regeneration (secondary forest with and without management). Different economic scenarios were considered with variations from revenues coming from timber sales, payment of environmental services (PES) by the Costa Rican government, and sales of emission reduction certificates. Forestry activities were analyzed in the context of other alternative uses such as cattle, bananas and pineapple plantations. The investment analysis was performed taking into account the land expectation value (VET) with annual minimum acceptable discount rates in real terms (TMA) of 9%, 6% and 3%, which reflected different investor preferences and conditions. For plantation forestry and secondary forest with and without intensive management, estimated average investment were US$5200, US$1730 y US$1373 ha-1, respectively. Timber revenues were above US$21142  ha-1for both species under plantation forestry. Secondary forest revenues were US$1250 and US$13408 ha-1 for secondary forest with low and intensive management, respectively. CER and PSA represented marginal quantities compared with timber revenues. Pineapple and banana plantations are land uses with the highest economic efficiency, followed by forest plantations. Cattle-raising and secondary forest with and without management are not only the least profitable land uses but also their calculated values are below the land price. Forest restoration will not become an acceptable economic activity for a landowner that relies on income generated from environmental services and carbon credits at current prices. High timber prices and low  discount  rates  (desirable  macroeconomic conditions) are determining factors in achieving efficient and sustainable investments in forestry activities in the Caribbean region of Costa Rica.