Economic analysis of poplar planting on steep hill country

Abstract

This paper analyses the costs and benefits of planting poplars for erosion control, to determine the economic incentives facing farmers. Using costbenefit analysis over a range of scenarios (e.g., a base scenario, a "most favourable" scenario, and a targeted planting scenario) and underpinning assumptions (e.g., erosion rates, planting densities, stock gross margins), it is found that the private (i.e., on-site) monetary incentives for planting poplars are marginal at best. Even at high expected erosion rates and repair costs, and with harvest values incorporated, the internal rate of return is low (between 5 and 6%). The paper indicates circumstances under which the decision to plant poplars is worthwhile for the farmer. These include circumstances where poplars significantly reduce lamb losses, subsidies are available, or nonmonetary factor are important. Keywords: cost-benefit analysis, erosion, poplars, profit, shelter, sustainability.