Long Term Lease of Forest Land-its Economic Evaluation

Abstract

Legislative constraints and bureaucratic red tape are handicaps in effcient functioning of the State Forest Departments. The success of Maharashtra Project may draw attention to the scope of operational efficiency if the Department is allowed to function as a business enterprise. This Project, hopefully forerunner of many others, should not only benefit the Department fianacially in the short run, but should go a long way in making foresters and administrators aware of the potential of selective and intensive investment opportunity in forest land of current low productivity. Forests leased out long periods at nomianl rates on the one hand deprive the Department of potential income which would have occurred had the forest not been leased and, on the other, make Project evaluation more favourable. Though it is impossible to accurately predict what would happen exactly in the future careful evaluation of the basic factors of production, i.e., land and the growing stock and use of a proper interest rate for discounting would go a long way not only in safeguarding adequate returns on the leased asseta but would also provide realistics costs for use in financial evaluation of investments in Projects, similar to one in Maharashtra.