Economic Evaluation of Rural Woodlots in a Developing Country: Tanzania

Rural areas in developing countries use wood as their main source of energy. Previously, wood has been obtained free from natural forests and woodlands. The pressure of increased demand through population growth, and the fact that natural trees take longer to grow, has made this resource scarce. Thus, raising trees in woodlots has been adopted as the solution to its shortage in the wild. However, growing trees in woodlots will inevitably require resources in terms of capital, land and manpower. Economic evaluation becomes necessary to ascertain that these resources are used economically. This paper dwells on some of the salient features of the economic evaluation of woodlots, such as interest rates, shadow prices of factors of production, social opportunity, cost of capital and sensitivity analysis of such woodlots in a developing country such as Tanzania.