Financial viability of small farm forestry based on no-cost sharing arrangement in Sal (Shorea robusta) forest of Bangladesh

The Sal (Shorea robusta) forests provide a substantial part of the forest cover of the country and contribute to the economy by providing timber, firewood, fodder, non wood forest products and by protecting the environment. Due to over exploitation the forest is being degraded. The Forest Department of Bangladesh had initiated a program through the participation of the present encroachers to stop this overexploitation. The centerpiece of this attempt was a no-cost sharing arrangement. A number of 63 settlers who were landless and encroachers before joining the program were settled in the forest. The settlers were provided 1.21 ha/299.51 acres degraded forestland with full input support. The current study examined the financial viability of the farms, including homesteads, based on this arrangement. The BCA approach was employed to determine the net incremental benefit. It was found that a no-cost sharing arrangement option was financially feasible. Sensitivity analysis showed that the NPV is sensitive to the cost items of the program. The NPV, IRR and BCR, BIR and AI of the program showed the feasibility of the program. The discount rate used in the analysis was the real discount rate (5.67%). The sensitivity of NPV to the discount rate was also examined and found the program was more feasible at a 10% nominal discount rate. The sensitivity analysis also showed that a decrease or an increase in cost and benefit respectively could substantially change feasibility indicators. The no-cost sharing arrangement could be replicated to manage forest resources at the initial level to create a multiplier effect for sustainable use of resources. Integration of technologies such as bee keeping or Seri-culture to the program could increase the scope of labor utilization and output of the degraded land.