Economic Analysis of Forest Management for Timber Production and Agricultural Production in Hillside Watershed Areas of Madagascar: A Case Study of the Itasy Region

Abstract

In hillside watersheds, forests play a crucial role in protecting against soil erosion. Not only does forest vegetation cover serve as a biological measure to prevent soil erosion, it also generates income through sustainable management practices. However, there is a scarcity of research that evaluates and compares the profitability of perennial woody crops with that of other agricultural crops by integrating biological aspects within an economic analytical framework in Central Madagascar. In this study, we address this gap by combining a biological growth model that captures complex forest dynamics with economic management data to utilize the discounted cash flow method. We applied this approach to evaluate and compare the profitability of forest management and agricultural crop production in the hillside watershed areas of Central Madagascar, which have experienced severe human-induced soil erosion. Although our results showed that timber production is a profitable option, other agricultural crops generate much higher profits, indicating that financial subsidies alone may not be enough to shift land use toward perennial woody crops. In addition, growing fruit trees such as oranges and mangoes appears to be a much more financially attractive option for local farmers than annual agricultural crop production.