Analysis of the profitability of the restitution of fire-affected beech forests in Serbia

Abstract

© 2017, ALÖKI Kft. The number of forest fires in Serbia caused by climate change has been continuously growing in recent decades, thus making the rehabilitation of the burned area increasingly important. In the period from 2003 to 2015, the total burned area (42.2%) was in beech forests. Cost-Benefit Analysis (the dynamic and the static approaches) was used as an approach to estimating the effects that restitution of beech forests can have on the environment, with the aim of finding the best solutions and making the best decisions about the desirability of the project. The dynamic approach (the analysis of tangible benefits and costs) led us to the conclusion that the investment in the restitution of beech forests destroyed by fires could be profitable only if it was based on wood production. Wood production may, depending on the site class, bear slightly higher interest rates (to better site classes) compared to previous estimates which ranged mainly around 3%. At lower discount rates (on poor quality sites), it takes more time to reach the break-even point, while the period of time needed to reach the break-even point shortens with higher discount rates. According to the static approach (the analysis of intangible benefits and costs) the benefits outweigh the costs, which makes the restitution of beech forests destroyed by fires acceptable.