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Financial Analysis of the Use of Land: Agriculture or Woodlot

Author

Listed:
  • Jacqueline Ninson

    (Department of Agriculture Economics and Agribusiness, College of Basic and Applied Science, University of Ghana, Legon-Accra P.O. Box LG 25, Ghana)

  • Irene S. Egyir

    (Department of Agriculture Economics and Agribusiness, College of Basic and Applied Science, University of Ghana, Legon-Accra P.O. Box LG 25, Ghana)

  • Akwasi Mensah-Bonsu

    (Department of Agriculture Economics and Agribusiness, College of Basic and Applied Science, University of Ghana, Legon-Accra P.O. Box LG 25, Ghana)

  • Edward Ebo Onumah

    (Department of Agriculture Economics and Agribusiness, College of Basic and Applied Science, University of Ghana, Legon-Accra P.O. Box LG 25, Ghana)

Abstract

Agriculture is the main driver of deforestation. In other to reduce deforestation, a viable alternative livelihood strategy, aside from agriculture, must be in place to provide a sustainable income for investors. Managing forests for sustainable production (the forest economy) has been suggested as an alternative for sustainable land use practice. In the current study, we undertook a comparative analysis of woodlots and agriculture. The profitability of agriculture and woodlot production in Ghana was compared using a profitability model. We looked at profitability in terms of Net Present Value (NPV) and the Benefit-Cost Ratio (BCR) of three regions in Ghana, namely, Ashanti, Bono-East, and Western Regions. We found that woodlot producers with contractual relationships with the Forest Commission and other forestry companies produce the highest Net Present Value (NPV) and Benefit-Cost Ratio (BCR). However, this profitability is marginally higher than that of agriculture, which gives a fixed yearly return. This means woodlot production may not be a panacea to reducing agriculture in Ghana.

Suggested Citation

  • Jacqueline Ninson & Irene S. Egyir & Akwasi Mensah-Bonsu & Edward Ebo Onumah, 2022. "Financial Analysis of the Use of Land: Agriculture or Woodlot," Land, MDPI, vol. 11(5), pages 1-15, April.
    • Handle: RePEc:gam:jlands:v:11:y:2022:i:5:p:642-:d:802807
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    References listed on IDEAS

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    1. Anne-Kathrin Weber & Lena Partzsch, 2018. "Barking Up the Right Tree? NGOs and Corporate Power for Deforestation-Free Supply Chains," Sustainability, MDPI, vol. 10(11), pages 1-18, October.
    2. Permadi, Dwiko B. & Burton, Michael & Pandit, Ram & Race, Digby & Walker, Iain, 2018. "Local community's preferences for accepting a forestry partnership contract to grow pulpwood in Indonesia: A choice experiment study," Forest Policy and Economics, Elsevier, vol. 91(C), pages 73-83.
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    5. von Amsberg, Joachim, 1998. "Economic Parameters of Deforestation," The World Bank Economic Review, World Bank, vol. 12(1), pages 133-153, January.
    6. Beatrice Asenso Barnieh & Li Jia & Massimo Menenti & Jie Zhou & Yelong Zeng, 2020. "Mapping Land Use Land Cover Transitions at Different Spatiotemporal Scales in West Africa," Sustainability, MDPI, vol. 12(20), pages 1-52, October.
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    Cited by:

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    2. Jaenam Lee, 2022. "Evaluation of Automatic Irrigation System for Rice Cultivation and Sustainable Agriculture Water Management," Sustainability, MDPI, vol. 14(17), pages 1-12, September.

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