Story | 16 Mar, 2021

Cost-Benefit Analysis of Forest Restoration Interventions in Sagaing Region, Myanmar

The Restoration Initiative (TRI) Myanmar Project has conducted a financial analysis of six restoration interventions in six townships of Sagaing Region, Myanmar that assesses the potential uptake of these interventions by small-scale farmers.

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Photo: A woman harvesting resin from Sterculia versicolor plantation established as a community forest in Kyunhla Township © Bo Sann

Applying the Restoration Opportunities Assessment Methodology (ROAM), data on costs and benefits of restoration interventions were collected in 2019 at six township-level workshops and then validated through farmer interviews. The time frame for analysis is set at 30 years to allow for comparisons between interventions. Present values of future costs and benefits were estimated using an annual discount rate of 10%. The financial analysis used three indicators: Net Present Value (NPV), Internal Rate of Return (IRR) and Benefit Cost Ratio (BCR).

The results indicate positive NPVs for all the interventions, ranging from MMK 2,704,665 per acre (teak and sesame intervention) to MMK 14,449,575 per acre (Sterculia versicolor plantation) over 30 years. IRR ranged from 19% for pure teak plantation to 76% for Sterculia versicolor plantation. All six interventions had a BCR of greater than 1, with the smallest (1.7) for mixed teak and sugarcane and the largest (5.1) for pure teak. Pure teak has the highest BCR and an acceptable NPV, but its low IRR makes it risky should the discount rate rise over 30 years. In other words, it’s a high return but high risk venture, which is why teak plantations are typically established by businesses not small-holders. From a small-holder perspective, Sterculia versicolor is the most profitable, followed by pineapple and then mango orchards. 

For further information, please see the report at LINK.