Ditch network maintenance in peatland forest as a private investment: short- and long-term effects on financial performance at stand level

• Main Authors: T. Penttilä, H. Hökkä, S. Kojola, A. Ahtikoski
• Format: Article in Journal/Newspaper
• Language: English
• Published: International Mire Conservation Group and International Peatland Society 2008
• Subjects: forestry economics; MOTTI stand simulator; net present value (NPV); return on investment (ROI); SINKA plots; Ecology; QH540-549.5; Northern Finland
• Online Access: https://doaj.org/article/080abc18efdf4c7d9752ac02aaf7928a

In Finland, most of the suitable peatland has now been ditched for forestry purposes, and ditch network maintenance (DNM) is carried out on 70,000–80,000 hectares of land each year. We examined the financial performance of DNM operations on 44 sample plots representing two medium-quality site types located within two different climatic regions in northern Finland. We applied a simulation approach in which actual measurements of trees growing on sample plots were fed into a stand simulator (MOTTI) which predicted stand development with and without DNM. The financial assessments involved calculating short-term and long-term effects of DNM by applying, respectively, ROI (return on investment) and NPV (net present value) analyses. The results indicated that the financial performance of DNM, particularly in the short term, was highly dependent on the availability of government subsidies. Without the DNM subsidy, the return on investment was between 1.6% and 3.7%; whereas with government subsidy it ranged from 3.8% to 8.4%. In the long run, the net present value was ca. 4–14% higher for stands with DNM than for those without.