An analysis of the profitability of the restitution of sessile oak forests affected by wildfires in Serbia

Abstract

Wildfires caused by climate change in Europe have numerous and long-lasting ecological, economic, and social implications for sustainable development (natural environment, economy, and society as a whole). Artificial revitalization of sessile oak forests destroyed by wildfires in Serbia is feasible, but it is quite expensive compared to the spontaneous regeneration. Cost-benefit analysis (an economic approach to comparing and estimating the benefits and shortcomings of a particular business plan, i.e., an investment project by analyzing its costs and benefits) is aimed at finding the best solutions and making the best decisions about the desirability of a project. It was concluded that the investment in the restitution of sessile oak forests could be profitable only if it was based on wood production. Wood production may bear slightly higher interest rates compared to previous estimates which ranged mainly around 3%. This primarily applies to better site classes, while poor quality sites require lower rates. At lower discount rates, 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. The length of the production cycle plays an important role in determining the investment profitability, especially regarding the relationship between the length of the production cycle and production targets (the type and the quality of wood assortments produced). According to the results of the analysis of intangible benefits and costs, the costs outweigh the benefits, which makes the restitution of sessile oak forests destroyed by fires unacceptable.