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Are community-based forest enterprises in the tropics financially viable? Case studies from the Brazilian Amazon

Author

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  • Humphries, Shoana
  • Holmes, Thomas P.
  • Kainer, Karen
  • Koury, Carlos Gabriel Gonçalves
  • Cruz, Edson
  • de Miranda Rocha, Rosana

Abstract

Community-based forest management is an integral component of sustainable forest management and conservation in the Brazilian Amazon, where it has been heavily subsidized for the last ten years. Yet knowledge of the financial viability and impact of community-based forest enterprises (CFEs) is lacking. This study evaluates the profitability of three CFEs in the Brazilian Amazon: Ambé, an industrial-scale, upland forest operation producing logs in a national forest, in Pará state; ACAF, a small-scale operation in flooded forests producing boards with a portable sawmill in Amazonas state; and Mamirauá, one of 30 CFEs in a reserve in Amazonas state producing logs and boards in flooded forests. Costs for each CFE were compiled by forest management activity and cost type. Annual total costs were calculated as the sum of fixed and variable costs and then subtracted from total revenue to obtain annual profit. The annual rate of return on investment was calculated by dividing profits by total costs. The Ambé and Mamirauá cases were profitable, demonstrating rates of return of approximately 12% and 2%, respectively; the ACAF case was not profitable. This study illustrates the benefits of cost-sharing among CFEs, and the potential return for investments in small and large-scale community forestry.

Suggested Citation

  • Humphries, Shoana & Holmes, Thomas P. & Kainer, Karen & Koury, Carlos Gabriel Gonçalves & Cruz, Edson & de Miranda Rocha, Rosana, 2012. "Are community-based forest enterprises in the tropics financially viable? Case studies from the Brazilian Amazon," Ecological Economics, Elsevier, vol. 77(C), pages 62-73.
    • Handle: RePEc:eee:ecolec:v:77:y:2012:i:c:p:62-73
    DOI: 10.1016/j.ecolecon.2011.10.018
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    References listed on IDEAS

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    Cited by:

    1. Aghane Antunes & Cynthia S. Simmons & Joao Paulo Veiga, 2021. "Non-Timber Forest Products and the Cosmetic Industry: An Econometric Assessment of Contributions to Income in the Brazilian Amazon," Land, MDPI, vol. 10(6), pages 1-16, June.
    2. Pinheiro, Silvia & Granados, Maria L. & Assunção, Manaira, 2020. "Local incentive structures and the constitution of community-based enterprises in the forest," World Development Perspectives, Elsevier, vol. 20(C).
    3. Frey, Gregory E. & Charnley, Susan & Makala, Jasper, 2021. "Economic viability of community-based forest management for certified timber production in southeastern Tanzania," World Development, Elsevier, vol. 144(C).
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    6. Hajjar, Reem & Newton, Peter & Ihalainen, Markus & Agrawal, Arun & Alix-Garcia, Jennifer & Castle, Sarah E. & Erbaugh, James T. & Gabay, Monica & Hughes, Karl & Mawutor, Samuel & Pacheco, Pablo & Scho, 2021. "Levers for alleviating poverty in forests," Forest Policy and Economics, Elsevier, vol. 132(C).
    7. Starfinger, Marcel, 2021. "Financing smallholder tree planting: Tree collateral & Thai ‘Tree Banks’ - Collateral 2.0?," Land Use Policy, Elsevier, vol. 111(C).
    8. Sanchez Badini, Olivia & Hajjar, Reem & Kozak, Robert, 2018. "Critical success factors for small and medium forest enterprises: A review," Forest Policy and Economics, Elsevier, vol. 94(C), pages 35-45.
    9. Shrestha, Krishna K. & Paudel, Govinda & Ojha, Hemant & Paudel, Naya Sharma & Nuberg, Ian & Cedamon, Edwin, 2022. "Community entrepreneurship: Lessons from Nepal's Chaubas community forestry sawmill," Forest Policy and Economics, Elsevier, vol. 141(C).
    10. Waldhoff, Philippe & Vidal, Edson, 2015. "Community loggers attempting to legalize traditional timber harvesting in the Brazilian Amazon: An endless path," Forest Policy and Economics, Elsevier, vol. 50(C), pages 311-318.
    11. Scudder, Micah G. & Herbohn, John & Baynes, Jack, 2019. "Are portable sawmills a financially viable option for economic development in tropical forests?," Forest Policy and Economics, Elsevier, vol. 100(C), pages 188-197.
    12. Carvalho Ribeiro, Sónia M. & Soares Filho, Britaldo & Leles Costa, William & Bachi, Laura & Ribeiro de Oliveira, Amanda & Bilotta, Patricia & Saadi, Allaoua & Lopes, Elaine & O'Riordan, Tim & Lôbo Pen, 2018. "Can multifunctional livelihoods including recreational ecosystem services (RES) and non timber forest products (NTFP) maintain biodiverse forests in the Brazilian Amazon?," Ecosystem Services, Elsevier, vol. 31(PC), pages 517-526.
    13. Macqueen, Duncan & Bolin, Anna & Greijmans, Martin & Grouwels, Sophie & Humphries, Shoana, 2020. "Innovations towards prosperity emerging in locally controlled forest business models and prospects for scaling up," World Development, Elsevier, vol. 125(C).
    14. Frey, Gregory E. & Cubbage, Frederick W. & Holmes, Thomas P. & Reyes-Retana, Graciela & Davis, Robert R. & Megevand, Carole & Rodríguez-Paredes, Diana & Kraus-Elsin, Yoanna & Hernández-Toro, Berenice , 2019. "Competitiveness, certification, and support of timber harvest by community forest enterprises in Mexico," Forest Policy and Economics, Elsevier, vol. 107(C), pages 1-1.
    15. Bocci, Corinne & Fortmann, Lea, 2023. "Community and industrial forest concessions: Are they effective at reducing forest loss and does FSC certification play a role?," World Development, Elsevier, vol. 170(C).
    16. Engbring, Gretchen & Hajjar, Reem, 2022. "Conflicts between core purposes: Trade-offs associated with organizational shifts in Mexican community forest enterprises," World Development, Elsevier, vol. 160(C).
    17. Fortini, Lucas B. & Carter, Douglas R., 2014. "The economic viability of smallholder timber production under expanding açaí palm production in the Amazon Estuary," Journal of Forest Economics, Elsevier, vol. 20(3), pages 223-235.
    18. Clare, Stephen M. & Ruiz-Jaen, Maria C. & Hickey, Gordon M., 2019. "Assessing the potential of community-based forestry programs in Panama," Forest Policy and Economics, Elsevier, vol. 104(C), pages 81-92.
    19. Shyamsundar, Priya & Ahlroth, Sofia & Kristjanson, Patricia & Onder, Stefanie, 2020. "Supporting pathways to prosperity in forest landscapes – A PRIME framework," World Development, Elsevier, vol. 125(C).
    20. Hintz, Kendisha Soekardjo & Kimengsi, Jude Ndzifon & Pretzsch, Jürgen, 2021. "How do smallholder forest farmers' organizations manage and commercialize wood products? – A global systematic review," Forest Policy and Economics, Elsevier, vol. 128(C).
    21. repec:ags:aaea22:335972 is not listed on IDEAS
    22. Humphries, Shoana & Holmes, Thomas & Andrade, Dárlison Fernandes Carvalho de & McGrath, David & Dantas, Jeremias Batista, 2020. "Searching for win-win forest outcomes: Learning-by-doing, financial viability, and income growth for a community-based forest management cooperative in the Brazilian Amazon," World Development, Elsevier, vol. 125(C).
    23. Ambrose-Oji, Bianca & Lawrence, Anna & Stewart, Amy, 2015. "Community based forest enterprises in Britain: Two organising typologies," Forest Policy and Economics, Elsevier, vol. 58(C), pages 65-74.

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