Land-use models

Background

The project established pilot plantations and shelterbelts with different techniques, under different modalities and in different circumstances, demonstrating the technical advances achieved. This, over time, evolved into the idea to develop afforestation and land-use models that could be used as templates for land-use planners and investors.

The models are based on experiences generated in and outside the project, and composed of different elements, that as such exists in the field, but in isolated form. These scattered and isolated elements have been assembled to form coherent and mostly integrated (i.e. consisting of more than one kind of system of production or protection) units that can exist independently.

Their main characteristic is the integration and complementarity of forestry, animal husbandry and agriculture, and the adjustment of the land-use according to the potential production capacity of the location as expressed by its site-class.

The models consist of detailed information on composition, spacing, densities, structure, management and expected outputs over time of the different models. Costs and expected income have been estimated, based on information generated by the project, or in lack thereof, recollected outside the project. All this information has been consolidated and processed in order to be able to do a financial analysis of the different models, and testing of sensitivity to different factors.

The land-use models have been validated and improved by representatives of the various forest bureaus from the region, and the process has been further enhanced next through validation sessions with rural households.

Interested financing agencies can use the models to compose large land-use projects, according to their needs and requirements, with participation of the local population.

Application of the models should be done in a flexible way. During implementation they should be adjusted to the existing landscape, to the site classes and to areas already occupied by villages, permanent (sustainable) agriculture and infrastructure.

One of the problems that have to be addressed is the reluctance of the major investment banks, to invest in natural resources development in northern China, where financial returns are supposedly lower compared to sub-tropical or tropical latitudes, with much faster growth. It is hoped that the financial analysis done by the project on the models may help to convince them of the investment opportunities existing in northern China. Not only are the financial returns interesting, the indirect economic and ecological benefits generated may well outweigh the ones generated by a similar sized investment elsewhere.

Description and financial analysis of the models

Sixteen afforestation models were developed, which were based on main technical results achieved by the project. These results include:

  • land-use and site classification, which is one main component in establishing afforestation models;
  • research for adapted species and poplar clones to the project intervention area conditions, base on which the promising species or provenance were selected in the afforestation models;
  • improved nursery techniques, which are unrooted cuttings, can be used with the mechanized planting techniques in poplar plantation and mechanized undercutting of one-year-old seedlings for pine plantation;
  • improved afforestation techniques, which are the mechanized auger planter (MAP) and the medium depth planter (MDP) used in poplar planting;
  • revegetation techniques which include fencing off, broadcast sowing of shrubs etc.

According to the main objectives and benefits, the 16 models were classified into three categories: 1) agroforestry (AF), 2) productive plantation (PP) and 3) revegetation (RV) models.

Financial analyses were conducted in 2002 on the 16 models to evaluate the financial attractiveness of each model to farmers and investors. Since price and yield projections over a long period of analysis for the financial rate of return calculation is subject to uncertainties, a sensitivity analysis using lower prices and/or yield levels was also undertaken to test financial viability of each model in an adverse scenario. Comparative analyses were conducted for the alternative designs.

Operations, tradable resources and products are identified and quantified in appropriate units. They are scheduled over time as they are either used in the system or produced by the system. Current market prices were used for valuing inputs and outputs.

Major assumptions for financial analysis

In the 16 afforestation models, there are significant annual fluctuations in the yields of fruit, crop and wood production over the duration of the rotation. The average yields during the productive years were used for the financial analyses.

As the models were designed mainly for environmental protection and for application in sandy lands, exemption of taxes and fees was assumed, in accordance with a series of incentives on afforestation from the Chinese Government. Hence, taxes and fees were not taken into account in the financial analyses.

The areas for the establishment of the 16 models were considered as new cropland, forest land or revegetation development, the full component costs and benefits are incremental, as there is no product produced in the "without" project situation and opportunity cost of land-use was assumed to be zero.

A discount rate of 12% was selected based on the rate used in other afforestation projects in China supported by the World Bank.


Extracted from
FAO. 2002. Technical project review document. Rome.
last updated:  Monday, October 17, 2005