PROFITABILITY OF REHABILITATION OF OVERLOGGED DIPTEROCARP FOREST - A CASE-STUDY FROM SOUTH KALIMANTAN, INDONESIA

The objective of this study was to measure work outputs and estimate c ost/benefit ratios through establishing a critical log price. The crit ical log price is the additional amount of money which should be obtai ned at the end of the rotation to cover the investment. The work cover ed the first 6 years of rehabilitation of shifting cultivated and over logged dipterocarp forest. The cost/benefit analyses were calculated u sing variable interest rates (4-20%), three rotation intervals (25, 35 and 50 years) and two annual volume increment estimates 8 and 17 m(3) ha(-1) per year. The effective working time was only 49% of the total time. Certain ameliorations are possible and would improve the econom ic outcome. Rehabilitation of areas previously under shifting cultivat ion is economically feasible provided that the interest rate is 4-8% a nd rotation 25-35 years at the critical log price of between USD 0.7 a nd USD 5.8 m(-3). With increasing interest rates and longer rotations (up to 50 years) the profitability declines sharply. As long as intere st rates are less than or equal to 8% and the growth rate is at least 17 m(3) ha(-1) per year, the 50 year rotation also yields a reasonable economic result (USD 6.1 m(-3)). At present salary levels and the inc reasing lumber prices, rehabilitation of depleted dipterocarp forest s eems to be attractive also from the economic point of view. Valuing en vironmental benefits would increase profitability of rehabilitation op erations considerably.