Some Methodological and Practical Aspects of Accounting the Returns from Clearfelling Natural Forests in the Evaluatioon of Intensive Forest Development Projects

Abstract

Tbe newly formed Forest Development Corporations (FDCs) in India have the responsibility of formulating and implemeating intensive forest development projects for their respective areas. Since the FDCs operate on the lands currently uAder natural forests, the procedure for handling the net returns from clearfelling the natural stands in the project area has significant beariogs on the results of economic evaluation of the project. The forest development projects prepared onder tbe State Planning Programme included the net returns from clearfelling the natural forests with the benefit streams of man-made forestry. The National Commission on Agriculture, a number of foresters and economist. have agreed with this procedure. The paper has summarised the arguments behind this procedure. These arguments have been examined and found inconsistent with the generally accepted practices of economic analysis. More importantly, the National Commission on Agriculture appears to have contradicted itself whaile accepting the procedure used in the projects formulated under the State Planning Programme. Some real life problems that have arisen due to this procedure have also been discussed. As an alternative, it is suggested that the return. From natural forests on the project areas be treated as A capital assets With the FDCs. The concerned State Goveroment (s) may be deemed to have subscribed to tbe equity capital of tbe corporation (s) as and when the natural stands are clearfilled and the returns received. This procedure is considered to be conceptually consistent and is expected to save some embrrassment to the project authority.