Farm-based versus industrial eucalyptus plantations for electricity generation in Nicaragua

In Nicaragua, two sugar mills are going to generate electricity from eucaly ptus outside the sugarcane season. The eucalyptus comes from the sugar mill s' already existing industrial energy plantations. In this study, we look a t the possibility of an alternative wood supply from small scale farm-based plantations to one of these sugar mills. With farm-based plantations 77% o f the value added which is generated eventually benefits low income groups, while with the industrial plantations this is between 17 and 47%. Employme nt creation doubles when the wood is produced by farmers instead of the sug ar mill. If the wood is sold as standing stock, the farmers would need at l east a price of 6.7 $/m(3) in order to obtain the minimum wage of 2.2$/day invested in the plantation. The avoided costs for the sugar mill are almost 11$/m(3). With the already existing sale of wood to the urban market, the farmers can obtain a net income of 4.9 $/day. If they would sell their wood to the sugar mill and if the sugar mill is willing to pay the avoided cost s, this will become 5.5 $/day. Overall, from a financial point of view, the re seems to be a good opportunity for Nicaraguan farmers to produce wood fo r electricity generation in sugar mills. (C) 2000 Elsevier Science Ltd. All rights reserved.