A financial analysis of small-scale tropical reforestation with native species in Costa Rica

Abstract

In 1990 four Peace Corps Volunteers in Costa Rica completed their service and started a private reforestation project. The goal was to see if a small tree plantation could be profitable compared with traditional land uses. This article discusses the economics of the first 15 years of the project, using actual cash flows, and makes projections for financial outcomes. We documented the yearly expenses and revenues (cash flows) for operating a small tropical woodlot, costs and/or revenues from the specific woodlot management operations, and profit projections over the 25-year life of the project. We used realized growth rates, milling costs, and wood sale prices to show that small-scale reforestation with mixtures of native species can be financially profitable, both for an investor and a former/landowner.