Local Contributions of Forests to Economic Growth of Peru: A Case of Pinus radiata Plantations

Abstract

SUMMARY The economic contributions from forestry sector remain relatively important in all developing economies. Over the past few decades, value added in the forestry sector of these economies has gradually increased. Consequently, the need for a detailed and accurate assessment of the economic contribution of the sector has grown in order to gain the attention of the policy makers and to highlight its importance in poverty alleviation and sustainable development. Contrarily, In Peru, forestry sector continues to be left behind due to faster growth in other sectors of economy. Despite having considerable forest resources, the full extent of economic contributions of the forestry sector to local as well as the national economy is still poorly understood. Sparsity of up-to-date data on value added in the forestry sector and a general disregard to any forests other than Amazonian rainforests have compounded the already existing situation. In this context, this paper aimed at making an empirical analysis of the direct contributions of the forestry sector to the local economy of Peru in the short run using an annual time series data from 2007 to 2016. The Pinus radiata plantation forests of the Department of Ayacucho located in the Southern Peruvian Andes served as a case for this study. The results revealed nominal but significant contributions of the Pinus radiata forests to the economic growth of the Department of Ayacucho. As our study was limited only to direct cash benefits, future studies should also take into account informal and non-cash benefits in order to fully apprehend the economic contributions of the forestry sector to local and national economy.