An analysis of the profitability of the restitution of sessile oak forests affected by wildfires in Serbia

Tatjana RATKNIĆ; Mihailo RATKNIĆ; Jonel SUBIĆ; Zoran PODUŠKA; Gordana ŠEKULARAC; Miroljub AKSIĆ; Sunčica VJEŠTICA

doi:10.15835/nbha49212260

Authors

Tatjana RATKNIĆ Institute of Forestry, Kneza Višeslava 3, 11000 Belgrade (RS)
Mihailo RATKNIĆ Faculty of Applied Ecology - Futura, Požeška 83a, 11000 Belgrade (RS)
Jonel SUBIĆ Institute of Agricultural Economics, Volgina 15, 11000 Belgrade (RS)
Zoran PODUŠKA Institute of Forestry, Kneza Višeslava 3, 11000 Belgrade (RS)
Gordana ŠEKULARAC University of Kragujevac, Faculty of Agronomy, Cara Dušana 34, 32000 Čačak (RS)
Miroljub AKSIĆ University of Priština, Kosovska Mitrovica, Faculty of Agriculture, Kopaonička bb, 38219 Lešak (RS)
Sunčica VJEŠTICA Faculty of Applied Ecology - Futura, Požeška 83a, 11000 Belgrade (RS)

DOI:

https://doi.org/10.15835/nbha49212260

Keywords:

economic analysis, financial analysis, restitution, sessile oak forests, wildfire

Abstract

Wildfires caused by climate change in Europe have numerous and long-lasting ecological, economic, and social implications for sustainable development (natural environment, economy, and society as a whole). Artificial revitalization of sessile oak forests destroyed by wildfires in Serbia is feasible, but it is quite expensive compared to the spontaneous regeneration. Cost-benefit analysis (an economic approach to comparing and estimating the benefits and shortcomings of a particular business plan, i.e., an investment project by analyzing its costs and benefits) is aimed at finding the best solutions and making the best decisions about the desirability of a project. It was concluded that the investment in the restitution of sessile oak forests could be profitable only if it was based on wood production. Wood production may bear slightly higher interest rates compared to previous estimates which ranged mainly around 3%. This primarily applies to better site classes, while poor quality sites require lower rates. At lower discount rates, it takes more time to reach the break-even point, while the period of time needed to reach the break-even point shortens with higher discount rates. The length of the production cycle plays an important role in determining the investment profitability, especially regarding the relationship between the length of the production cycle and production targets (the type and the quality of wood assortments produced). According to the results of the analysis of intangible benefits and costs, the costs outweigh the benefits, which makes the restitution of sessile oak forests destroyed by fires unacceptable.

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References

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