Impact Assessment

Partering with Paper Mills to Promote Forestry in India, IFC, 2009

    Description
    IFC has partnered with the Ballarpur Industries Limited (BILT) paper mill in Orissa to encourage more rice farmers to engage in forestry programs. Participating communities are clearly benefiting from the income received from selling trees grown on previously non-cultivated degraded land after the 3-year growing period. One basic issue with such programs, though, is that despite their returns, participation rates have historically been quite low (less than 10%). Part of the reason may be that people often resist undertaking long-term beneficial activities that have immediate costs. Tree planting fits this class of problems. The benefits of the trees, while quite large in net-present-value terms, are still experienced in the distant future, while costs are experienced today. Self-control problems might make such activities especially difficult.

    As part of the evaluation, IFC found that rice farmers had very little knowledge of the potential profitability of tree plantations. These farmers knew nothing about average market prices nor did they have any clear sense of potential profits per acre. Perhaps most surprisingly, this was even true among farmers who already had tree plantations. These farmers seemed to have planted trees more as an experimental residual investment - simply to try it out - rather than from enthusiasm about high returns.