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Drought Risk: Have Economic Benefits From E. Globulus Plantations In South West Australia Been Overestimated?

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  • Duncanson, Tym
  • Schilizzi, Steven

Abstract

The social and environmental benefits of establishing E. globulus plantations in south west Australia on previously cleared farmland are reviewed. Due to their sensitivity to drought, we study how this risk may affect the return on plantation investments. Productivity reductions of up to 40% in both rotations did not result in an internal rate of return lower than the threshold 10%. These results assume that growers could sell into the international market and receive export parity prices. If this case, large reductions in plantation productivity should not discourage investment and the reported social benefits should not be greatly affected.

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  • Duncanson, Tym & Schilizzi, Steven, 2001. "Drought Risk: Have Economic Benefits From E. Globulus Plantations In South West Australia Been Overestimated?," 2001 Conference (45th), January 23-25, 2001, Adelaide, Australia 125614, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare01:125614
    DOI: 10.22004/ag.econ.125614
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    References listed on IDEAS

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    1. Pannell, David J., 1997. "Sensitivity analysis of normative economic models: theoretical framework and practical strategies," Agricultural Economics, Blackwell, vol. 16(2), pages 139-152, May.
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