1. Community-based investment in commercial plantation forestry Mike Howard Fractal Forest AFRICA Water & Forestry Support Programme mdhoward@iafrica.com

2. Background South Africa – water scarce country Expansion of plantations limited Previous “homeland” states - Apartheid Land restitution – compensate past injustices Rural poverty focus + Equity How appropriate is commercial plantation forestry?

4. Extraordinary Cost Elements of Community-Based New Afforestation Community facilitation / mobilization – US$15 000 Land restitution “Capacity building” Planning the Forest Enterprise – US$8 500 SFRA licensing – US$3 000 – US$12 000 Water Biodiversity Soil conservation Weed species All fixed cost – not dependant on area (ha)

5. Cost of Silvicultural Operations Eucalyptus Establishment – US$ 900/ha Coppice management – US$ 250/ha Wattle (Acacia mearnsii) Establishment (plant) and Tending to Year 2 - US$1000/ha Annual overhead – US$ 120/ha/year

6. Typical Cash Flow

7. Discounted Cash Flow (DCF) Measures Compare return against alternate investments Internal Rate of Return - % IRR Equivalent Annual Income (Value per year) Time value of money – compound interest Costs vs Benefits

8. Community Investment - Different Wages large part of cost Wages = intermediate revenue stream Wages = community benefit Efficiency of investment Local source of revenue - rural Multiplier effect within community Minimize transport expenses

9. Community Investment Cash Flow

10. 4 Case studies

11. Details of Case Studies Case # CaseAfforestation ModelArea Distance to Market Mean Annual Rainfall Rotation Length Yield at clear felling hakmmm/yryrsm3/hatons/ha 1 Cata Community Development Wattle rehabilitation for pulpwood 5414095010138100 2 Small-scale Outgrower Eucalypt for pulpwood 25010007206140 3 Large-scale Community Development Eucalypt for pulpwood 110020012009235160 4 Medium Scale Farmer Eucalypt for pulpwood 1505010008235160

15. 3 Scenarios Scenario 1. – Traditional Approach Scenario 2. –Cash out flows associated with wages are also considered as a revenue stream Scenario 3. – Based on Scenario 2 (wages as revenue) but typical monetary support from Government, Donors and Companies

16. Findings

18. Conclusion Plantation forestry – Good Investment Small areas prejudiced by large set up costs Wages as revenue – positive Funding from Government, Donors & Companies – Very important – Very lucrative Plantation forestry – Appropriate for Rural Poverty Relief and Sustainable Development