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  • 1. policyEconomic Impact Evaluation ofUruguay Forest SectorDevelopment Policy Virginia Morales Olmos and Jacek P. Siry Since the 1960s, the government of Uruguay has been encouraging forestry as an alternative use for This research evaluates the impact of marginal agricultural lands in an effort to promote economic development, diversification, and the new forest sector on the Uruguayan environmental services. The Forestry Law of 1987 (Parliament of Uruguay 1988) introduced subsidies economy by considering the costs and ben- and tax exonerations for the development of forest plantations and wood manufacturing industries. efits associated with the policy that started ABSTRACT Consequently, the new forest sector has been growing rapidly, attracting foreign investment. This study with the Forestry Law 15939. It uses a cost– evaluates the impact of Uruguay forest sector development policy on the country’s economy by benefit analysis (CBA) framework to deter- conducting a cost– benefit analysis. The results indicate a positive net impact when compared with mine the impact of the new forest sector on livestock production. The NPV associated with the forest sector development was US$615.4 million, and the Uruguayan economy. It approaches the the internal rate of return was 32.4%. The successful implementation of the forest policy has allocated analysis from the point of view of the econ- land to more productive uses while attracting foreign investment, generating income and employment, omy, using shadow prices and a social dis- and providing environmental benefits. count rate. The results will be used to assess whether the policy has been successful or not Keywords: forest policy, forest economics, Uruguay, cost-benefit analysis and help determine whether it has been nec- essary to promote forest development. In ad- dition, we will identify other policy factorsI ncentives promoting investment in the oping since the passage of the Forestry Law that were crucial for policy’s outcomes. development of forest plantations and 15939 in 1987 (Parliament of Uruguay The remainder of this article is orga- wood manufacturing industries have 1988, Duran 2004). ´ nized as follows. First, we discuss the Uru-been a controversial policy issue in recent Several studies have attempted to eval- guayan forest sector and examine forest lawsdecades. In Latin America, the use of incen- uate the Uruguayan forestry policy and its and regulations. Next, the analytical methodtive mechanisms promoting forest invest- impacts from the point of view of the gov- is presented. The CBA is discussed alongments started in the 1960s and was broadly ernment by focusing on fiscal impacts (Gonza-´ with data and assumptions. Then, the CBAadopted in the 1980s. Chile, Argentina, Bra- lez Posse and Barrenechea 1996); estimating results are presented. In conclusion, the ar-zil, and Uruguay introduced subsidies, tax tax balance, unemployment balance, and ticle provides policy recommendations andbreaks, and tax exonerations to promote the product balance (Vazquez Platero 1996, ´ identifies opportunities for additional re-development of forest plantations and wood Ramos and Cabrera 2001); or by studying in- search.manufacturing industries. Although a late dividual firms (Metsa-Botnia 2004, Worldcomer, Uruguay has developed a forest sec- Bank 2005). These studies did not reflect the Uruguay Forest Sectortor as part of this broader trend. The Uru- opportunity cost for the Uruguayan society Uruguay is a small South Americanguayan forest sector has been rapidly devel- of the resources used in the forest sector. country surrounded by Argentina and Bra-Received August 6, 2007; accepted September 12, 2008.Virginia Morales Olmos (virginia.morales@weyerhaeuser.com) is timberlands business analyst, Weyerhaeuser Corporation, Uruguay, 18 de Julio 823, Melo, CerroLargo, CP3700, Uruguay. Jacek P. Siry (jsiry@warnell.uga.edu) is associate professor, Warnell School of Forest Resources and Natural Resources, University ofGeorgia, Athens, GA 30602-2152.Copyright © 2009 by the Society of American Foresters. Journal of Forestry • March 2009 63
  • 2. zil. In 2005 its gross domestic product(GDP) equaled US$18 billion (BCU 2005).Agriculture and livestock contributed 8.7%to the GDP. The silviculture subsector,which comprises forest plantations, has in-creased its share in the agricultural productfrom 3.8 to 9% between 1990 and 2005(DIEA 2006a). Forests cover 1.5 million ha or nearly9% of land area (Food and AgricultureOrganization [FAO] 2005). They are classi-fied as either plantations or natural forests.Forest plantations cover 751,000 ha andtheir area has grown rapidly from 97,000 hain 1990. Eucalyptus species account for76% of the planted area and pine accountsfor 22% (Figure 1). Natural forests cover Figure 1. Area planted by species (cumulative).740,000 ha, representing 4% of the coun-try’s land area (MGAP 2000). wood harvest, which, in turn, would sup- The main objectives of the 1987 For- Wood products manufacturing has be- port export-oriented production. Pulpwood estry Law were to increase planted forestgun developing rapidly in the 1990s. The exports (roundwood and chips) increased cover and to protect native forests. The pol-forest sector today is characterized by the from 46,251 m3 in 1988 to 1.6 million m3 icy instruments used included regionaliza-coexistence of large, vertically integrated in 2004 (Forest Division 2005). During tion, tax exonerations, subsidies, and credit.firms with many small-scale primary pro- the 1990s pulpwood was primarily ex- Regionalization consisted of defining forestducers and a substantial presence of foreign ported to Europe, mainly Spain, Norway, priority zones in the country, which com-investors (Duran 2003, Mendell et al. ´ Finland, and Portugal. Lumber exports in- prised land available for afforestation under2007). creased from a mere 2,135 m3 in 1990 to the policy. When certain conditions were Two domestic firms, Fymnsa and Uru- 120,347 m3 in 2004. Lumber was primarily met, landowners in the forest priority zonesfor, control the largest sawmills in the coun- shipped to Italy, the United States, and were eligible for support provided by thetry and currently are increasing their pro- Japan. policy.duction capacities. Plywood is produced by Forest Policy and Law. The Parlia-Weyerhaeuser and Chilean Urupanel. Finn- ment approved the nation’s first Forestry Methodsish Botnia completed a pulp mill at the end Law in 1968 (Parliament of Uruguay 1968), The Uruguayan forest policy was eval-of 2007. This mill, with its value exceeding and the forest sector became the only sector uated by conducting a CBA from the pointUS$1 billion, represents the single largest in- of the economy with a promotion policy. of view of the entire economy. This com-vestment in the country’s history. Spanish The policy’s objective was to increase the prehensive procedure considers all potentialEmpresa Nacional de Celulosa has partner- forest cover. The law did not achieve its gains and losses from a policy and is partic-ships with several domestic manufacturers objectives for a variety of reasons, mainly be- ularly designed for the evaluation of publicand is planning the development of a pulp cause the provisions were incomplete, re- projects. Costs and benefits are measuredmill. Finally, the most recent arrival, Swed- quested funds were not allocated to the for- in terms of social utility gains and lossesish Stora Enso is also planning the develop- est fund, and priority zones for afforestation rather than cash or revenue flows. Therefore,ment of a pulp mill. were not identified. Furthermore, credit taxes and subsidies are not included in the Wood Harvest, Manufacturing, and provisions were not designed in accordance CBA because they represent transfers be-Trade. Growing plantation wood harvest with the long-term characteristics of forest tween agents within the economy (Little andfueled a rapid growth in wood exports. The investments. Mirrlees 1974, Boardman 2001).harvest volume increased 48% between The second Forestry Law was approved The period of analysis was from 1989 to2000 and 2005, rising from 2.9 million to in 1987 (Parliament of Uruguay 1988), 2005, beginning with the establishment of5.7 million m3. Pulpwood production in- with broad support even though some first plantations resulting from the passagecreased from 893,000 to 1.6 million m3, and members of the Parliament expressed their of the Forestry Law 15939. The discountfuelwood production increased from 1.4 to concerns about some of its provisions. Sub- rate used in this project was 6%. This is the1.6 million m3. Much of the harvest, except sidies proved to be particularly contentious. social interest rate that is being used in thefor fuelwood, is exported (Forest Division The main issues were (1) whether the sub- country to evaluate local development2005). sidies were necessary to attract invest- projects. Although export growth has been rapid, ments; (2) whether to subsidize other, al- “With” and “Without” CBA. Theits share in the country’s trade balance re- ready established, sectors of the economy; “with” and “without” analysis consists of es-mains low. Forest products exports account and (3) whether the subsidies should be in timating the net marginal benefit inducedonly for 5% of the country’s total exports effect for regions where better alternative by the new policy to show what would be the(ALADI 2006). It is expected, however, uses exist for lands allocated to forest devel- situation in the area of study with and with-that maturing plantations will increase opment. out the project (Londero and Cervini 2003).64 Journal of Forestry • March 2009
  • 3. In this article, the “with” case is defined as “without” case. The analysis considered from studies conducted by Vazquez Platero ´the case with the Forestry Law established in three types of cash flows: benefits, invest- (1996) and Ramos and Cabrera (2001).1987. This case encompasses forest planta- ments, and costs. Benefits represented posi- Growth rates and management plans weretions established as a result of the law from tive changes for the economy, e.g., increased also obtained from these studies and were1989 onward along with forest industries employment, decreased imports, or in- supplemented with current information ob-that used plantation harvest to manufacture creased exports. Costs consisted of forest tained from the survey and the Forest Pro-wood products, primarily sawmills. The production costs such as planting, thinning, ducers Society.“without” case is defined as the case without and harvesting, followed by wood product It was assumed that 70% of the euca-the Forestry Law, assuming that land uses manufacturing, transportation, and export. lyptus plantation area was grown for pulppreceding the policy (livestock production) The analysis considered two types of invest- and 30% was grown for sawtimber (Tables 1continued throughout the evaluation pe- ments: forest plantations and wood product and 2). Both thinnings produced pulp-riod. Therefore, meat processing, tanning, manufacturing. Although investments are wood, and volume estimates were based onand wool industries were considered as alter- generally considered positive for the econ- Methol’s model (Methol 2003). It was as-native industries. omy, in the cash flow analysis they were sumed that 100% of the pine plantations The question may arise whether the tra- given a negative sign as they took resources were grown for sawtimber (Table 3). Thisditional land uses, i.e., livestock production, (land, labor, and capital) from other sectors assumption was based on Ramos and Ca-would continue during the evaluation pe- of the economy and resulted, at least during brera’s model for pine in northern Uruguayriod without the forest policy. Although we the evaluation period, in increased imports (Ramos and Cabrera 2001).do not know for certain, it is quite likely that of primarily manufacturing equipment. Plantation costs included fencing, soillivestock production will remain a predom- An NPV greater than zero indicates preparation, ant control, fertilization, seed-inant land use without the forest policy. In that forestry compared with livestock pro- lings, planting, and other minor costs andreality, only marginal agricultural lands were duction generates more benefits than costs were taken from Ramos and Cabreraconverted to forestry and, in some cases, to the economy. On the other hand, an (2001). The total production costs for euca-agroforestry uses. Beyond agriculture and NPV smaller than zero indicates that the lyptus and pine plantations are presented inforestry there have not been any other devel- costs were higher than the benefits, and Tables 4 and 5. Labor accounted for 16% ofopmental pressures. So, the question really therefore the continued livestock produc- the costs, and imported items accounted forbecomes whether the forest sector would tion would have been preferable. In addi- another 10%. Only labor and importedhave developed without the forest policy. tion, the internal rate of return (IRR) of items were included because they representThat too seems quite unlikely. the net cash flows was calculated. The IRR is the opportunity cost of resources foregone Uruguay’s Forestry Law passed in 1968 the discount rate for which benefits and for the economy.was the first forest sector promotion policy costs from the project are equal; therefore, In estimating wood industry manufac-in the country. Because its provisions were the NPV at the IRR is equal to zero. An turing costs, sawmills were included for theincomplete or insufficient funds were allo- IRR higher than the discount rate reflecting case “with” the law. The case “without” thecated, the policy failed. Only with the sec- the opportunity cost of the capital indicates 1987 law consisted of meat processing, tan-ond Forestry Law of 1987 did the forest sec- that the policy provided benefits for the ning, and wool industries. Transportationtor begin to develop. economy. cost from the plantation to the sawmill was It is unlikely that domestic entities In addition, the analysis uses shadow assumed at US$0.11/tn per km and fromwould initiate a rapid forest sector develop- prices to evaluate the policy’s impacts. the sawmill to the port was assumed atment. The reasons for that are numerous. Shadow prices are defined as increases in US$0.045/tn per km (Ramos and CabreraCapital in Uruguay is very limited and diffi- welfare resulting from marginal changes in 2001). In case of livestock production, live-cult to obtain. There also was not the know- the availability of commodities or factors of stock transportation cost was estimated athow necessary for the rapid deployment of production. They are used when market US$0.11/tn per km (Ramos and Cabrerafast-growing plantations including genetic prices do not reflect the opportunity cost of 2001, DIEA 2006b).material selection, appropriate management using the resources. A CBA uses prices that Investments in plantations were calcu-regimes, adequate wood manufacturing aim at capturing the money measures of lated as the total area reported to the Forestcapacity, and developed exports markets. the effects attributable to an additional de- Division multiplied by the land price perThis expertise was to a large extent brought mand or supply of goods and services on all hectare for the same year. Forest and live-in by foreign investors. Investors could have individuals affected (Londero and Cervini stock land price series were provided bycome to the country earlier but they chose 2003). DIEA (2006c).not too, at least not until the 1987 Forestry Data. Costs, investments, and benefits For the case “with” the 1987 law, totalLaw was passed. These factors indicate that were estimated from primary and secondary wood exports were estimated according tothe rapid development of the forest sector information. Primary information was ob- the level of production. The total volumewould not have taken place without the pro- tained from a survey of five key forest com- extracted until 2005 was 35 million m3 ofmotion policy. panies in the country conducted in July pulpwood and 4 million m3 of sawtimber. The net present value (NPV) was calcu- 2006 (Morales Olmos 2007). Market prices As of 2005, there were no pulp mills in thelated to determine whether the forest policy were converted to shadow prices according country; therefore, it was assumed that allgenerated net benefits for the economy. It to two studies conducted in 1995 and 2004 pulpwood was exported. The sawn woodrepresents the difference between cash flows (Fernandez Gaeta 1995, Pereyra 2004). For- ´ was processed and exported as lumber. Ex-for the “with” case and cash flows for the est plantation and sawmill data were taken port value was estimated by considering av- Journal of Forestry • March 2009 65
  • 4. Table 1. Eucalyptus management regime Table 3. Pine management regime.(pulpwood). Cubic metersGrowth rate (m3/ha per yr) 30 Extraction per hectare Year Sawtimber Fuelwood NonvalueRotation age (yr) 9Extraction (m3/ha) 250 . . . . . . . . . . . . . .(%) . . . . . . . . . . . . . . First thinning 11 4 0 0 100Source: Methol (2001). Second thinning 93 12 50 50 0 Third thinning 188 18 70 30 0Table 2. Eucalyptus management regime Final harvest 255 22 85 15 0(sawtimber). Source: Ramos and Cabrera (2001). Cubic meters Table 4. Eucalyptus production costs. Table 5. Pine production costs.Extraction per hectare Product YearFirst thinning 50 Pulpwood 9 Pulpwood Establishment costs (US$/ha) 400Second thinning 140 Pulpwood 13 Establishment costs (US$/ha) 400 Pruning (US$/ha) 60Final harvest 340 Sawtimber 18 Administration and management (US$/ha) Administration and management (US$/ha)Source: Methol (2001). Ant control (year 1) 70 Ant control (year 1) 70 Coppice control (years 1 and 2) 19 Roads 4.6 Roads 4.6 Administration (annual) 4.7 Administration (annual) 4.7 Thinning (US$/m3) 8erage values obtained from the Forest Divi- Harvest (US$/m3) 8 Harvest (US$/m3) 8sion. Pulpwood prices ranged from US$20 Sawtimber Sources: Ramos and Cabrera (2001), Forest Industries Surveyto 30/m3, and lumber prices ranged from Establishment costs (US$/ha) 400 (2006). Pruning (US$/ha) 60US$84 to 112/m3 (Forest Division 2004). Administration and management (US$/ha)For the scenario “without” the 1987 law, Ant control (year 1) 70exports from alternative activities were based Coppice control (years 1 and 2) 19 Roads 4.6on existing production levels and producer Administration (annual) 4.7 crease by more than 3% and the NPV wouldprices (Table 6). Thinning (US$/m3) 8 decrease more than 26%. A reduction in The bare land value (BLV) criterion Harvest (US$/m3) 8 eucalyptus yields has more impact on NPVwas used to estimate the terminal value of Sources: Ramos and Cabrera (2001), Forest Industries Survey and IRR than a reduction in pine yields.the plantations investments. A BLV, associ- (2006). This is because approximately 76% of theated with a given rotation age, is the NPV of area is covered with eucalyptus and onlythe returns from all the rotations in the con- 22% is covered with pine.tinuing series (Clutter et al. 1983). The BLV was 32.4%. The results implied that the The results were also sensitive tofor the land devoted for eucalyptus planta- country was better off by allocating low pro- changes in land prices. A drop of 20% intions was estimated at US$4,106/ha and ductivity lands to forestry rather than live- land prices would result in a 14% increase infor the land devoted to pine plantations stock production, because it generated a pos- the IRR and a 21% increase in the NPV. Onwas estimated at US$1,982/ha. This BLV itive NPV compared with grazing and a rate the other hand, a 20% increase would lowerapproach is conservative in the sense that it of return higher than the discount rate used the IRR by 8% and the NPV by 10%. Thedoes not include the value of standing tim- to evaluate the project. The results showed IRR is less sensitive to changes in manage-ber; however, we did not have sufficient in- that when harvesting starts, the costs of for- ment costs. An increase of 10% in thinning,formation to develop a reliable estimate of estry increase but the benefits increase even harvesting, and management costs alters thethat value. more (Figure 2). It should be noted that the IRR by 2%. Finally, we assessed how sensitive the biggest forest industry investments consist- Forestry generates higher employmentresults were with respect to the assumptions ing of pulp mills were not included because than livestock production on the same landmade. The sensitivity analyses helped iden- they had not started their operations by the base. Considering the primary productiontify key variables that affect the policy’s re- conclusion of this study. costs in both alternatives, forestry costs aresults. They were conducted by varying wood The results are more sensitive to higher. Labor accounts for much of theprices, wood yields, transportation costs, changes in pulpwood prices than in lumber costs; therefore, the forest activity has a pos-land prices and thinning, administration, prices. A 10% rise in pulpwood prices would itive impact on employment. Results showand harvesting costs. increase the IRR by 1.3%. Meanwhile, the that, on average, forestry labor costs were same increase in lumber prices would in- four times higher than labor costs in live-Results crease the IRR by only 0.2%. This probably stock production. If pruning, thinning, The results indicated that the develop- results from the fact that pulpwood accounts management, administration, and harvest-ment of the forest sector (“with” the 1987 for most of the wood harvest; therefore, a ing costs are added, labor costs are 20 timesForestry Law) has had a net positive impact change in its price had a larger impact on the higher than those in livestock production.on the Uruguayan economy from 1989 to model’s results. These results are consistent with those esti-2005. The NPV for the forest sector alterna- The results are also sensitive to changes mated by the Forest Division and Ramostive equaled US$615.4 million, using a 6% in yields. If eucalyptus and pine plantations and Cabrera (Ramos and Cabrera 2001, Sandiscount rate. The IRR for the forest sector yields decrease by 20%, the IRR would de- Roman 2004). ´66 Journal of Forestry • March 2009
  • 5. Table 6. Livestock production and prices. Production PricesProduct (kg/ha per yr) (US$/kg)Beef 44–51 0.42–0.7Lamb 5 0.29–0.7Wool 3 1.2–3.5Source: Ramos and Cabrera (2001).Discussion and Conclusions The 1987 Forestry Law in Uruguay wasdeveloped to promote economic growth andgenerate environmental benefits. The gov-ernment considered it as a tool to transformmarginal agricultural lands offering goodforest growth conditions into a thriving, Figure 2. Forestry and livestock: Incremental costs and benefits.globally competitive forest sector. The gov-ernment thought that effective policies willhelp in developing a higher-value land use has reached such a development stage that it general equilibrium structure. It requires thewhile promoting economic development, can be self-sustaining from now on. As a re- estimation of macroeconomic equations,creating employment, attracting foreign in- sult, the 1987 Forestry Law and the ensuing which was beyond the scope of this project.vestment, and increasing exports. Although reallocation of land to forestry have been An I–O model uses a matrix to represent athe development of the Forest Law benefited beneficial to the national economy. nation’s economy in terms of linkages be-from broad support in the legislature, it still The future is promising and the policy tween sectors, households, and government.was controversial. Subsidies, tax breaks, and results will likely be even better when cur- The rationale for a more comprehensive ap-regionalization were hotly debated. rent developments are taken into the ac- proach is that in a small country such as The results of this analysis strongly in- count. The large Botnia mill started opera- Uruguay, the forest sector, once large pulpdicate that the law has been successful and tions in the end of 2007 and two other mills mill, and other manufacturing facilities as-achieved its stated goals. The forest planta- are under various stages of planning. At the sume production, will account for a largertion cover in Uruguay is currently nearly same time, the global demand for pulp has share of the country’s economy.four times higher than in 1990, employment increased by 4% in 2006 (Wood Resources Finally, additional research should in-and income increased, large investments in International 2006). In addition, the de- corporate nonmarket variables. They in-wood manufacturing were made, and wood mand for paper and board has also been clude a range of environmental services thatproducts exports are rapidly increasing. Al- growing, gaining 4.8% in 2004 only—the are provided by forest plantations. Environ-though subsidies and tax exonerations were largest increase since 1997. While lumber mental values are increasingly important inimportant factors in promoting the forest demand has decreased in the United States, policy debates, and Uruguay is no exception.investments, equally important were signals it has increased in Europe and Japan. The Although the plantations have been criti-that the policy sent to investors. Basically, growing demand represents an opportunity cized on environmental grounds, they ap-the government signaled that it was seriously for Uruguayan products; however, an anal- pear to put less stress on the environmentcommitted to forest sector development. ysis of price trends and markets would be than agriculture and livestock. They offer aThis helped to mass start forest plantation required to assess potential benefits. As a re- wide range of benefits from erosion protec-programs. Maturing plantations substan- sult, an extension of this CBA analysis tion to carbon storage, bird watching, andtially increased harvest volumes, attracting should be conducted in a few years time. protection of native forests as they decreasewood products manufacturing. This is because large wood manufacturing harvest pressures (FAO 2005). The country The arrival of substantial foreign invest- facilities are nearing completion and will ratified the Kyoto Protocol in 2001 and hasments flows was further promoted by gener- start operating in the next few years. Their been promoting participation in the cleanally stable economic conditions, the de- massive, value-added production targeting development mechanism for forestry andnomination of investments in US dollars, global wood and paper markets will have a agricultural projects. The opportunity costthus reducing foreign exchange risks and major impact on the country’s economy. of sequestering carbon has to be evaluated.regulations allowing setting up operations in The use of a more comprehensive In addition, plantation forests provide shel-free trade zones therefore repelling a number evaluation method may also cast more in- ter for cattle as agroforestry systems haveof taxes for up to 15 years. Where acquisi- formation on the policy’s impacts. Three been adopted in recent years. Certainly,tion of forest plantations took place, private approaches are generally used to evaluate some impacts could have negative environ-landownership and secure land tenure cer- forest policies. They include the computable mental consequences. All these impacts needtainly played a large role. general equilibrium (CGE) models, input– to be evaluated to inform policy debates and Even though many subsidies, particu- output (I–O) models, and CBA, which was permit rational land-use decisionmaking.larly those targeting tree planting, already used in this study. A CGE model simulates a In summary, this study evaluated theexpired, it is apparent that the forest sector market economy by considering an abstract 1987 Forestry Law in Uruguay nearly 20 Journal of Forestry • March 2009 67
  • 6. years after it was developed using a CBA ap- CLUTTER, J.L., J.C.FORTSON, L.V. PIENAAR, MENDELL, B., V. MORALES, Z. BENNADJI, A.proach to assess the impact of the new forest G.H. BRISTER, AND R.L. BAILEY 1983. Timber MORENO, AND J. SIRY. 2007. Financing Uru- management: A quantitative approach. Wiley, guay’s forestry sector: Survey and case study.sector on the national economy. The results New York. 333 p. J. For. 105:125–130.quite conservatively indicate a positive net DIEA. 2006a. Agricultural Statistics Division. An- METHOL, R. 2003. SAG Grandis: Support systemimpact of the newly developed forest sector nual Yearbook 2006. Available online at www. to Eucalyptus Grandis plantations management.on the Uruguayan economy when com- mgap.gub.uy/Diea/Anuario2006/index.htm; Tech. Ser. 131, Agricultural Research Na-pared with livestock production. The NPV last accessed Mar. 2007. tional Institute (INIA), Tacuarembo, Uru- ´ DIEA. 2006b. Agricultural Statistics Division. guay. 42 p.associated with the forest sector develop- Prices Yearbook: 1989 –2005. Available online METSA-BOTNIA. 2004. Socioeconomic study of thement law equals US$615.4 million, using a at www.mgap.gub.uy/DIEA/Precios/default.6% discount rate. The IRR is 32.4%. In ad- impacts of Botnia SA Pulp Mill Project in Uru- htm; last accessed Mar. 2007. guay. Executive Summary. Available online atdition, the current area of forest priority DIEA. 2006c. Agricultural Statistics Division. www.metsabotnia.com; last accessed Augustsoils is 3 million ha, while forests are already Land Prices Series UYE 935902 and UYE 935908. Available online at www.mgap.gub. 2006.planted on 750,000 ha. This indicates that MINISTERIO DE GANADER´A AGRICULTURA Y PESCA I uy/SeriesHistoricas/hshistoricas.aspx; last ac-the planted forest area can still grow sub- cessed Mar. 2007. (MGAP). 2000. Agricultural census. Agricul-stantially, followed by further growth of DURAN, V. 2003. 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