Benefit-cost analysis of with and without certificate of verification requirement for harvesting in private bamboo plantations in the Philippines

Abstract

© 2019, Department of Science and Technology. All rights reserved. To protect the country's forestlands, the Philippine government requires owners of private bamboo plantations to obtain a certificate of verification (CoV) from the Department of Environment and Natural Resources (DENR) prior to harvesting the bamboo poles. However, this requirement is seen as a disincentive to planting bamboo and as a hindrance to the bamboo industry's development. The present study investigated whether the economic benefits of removing the CoV would exceed the costs attendant to the absence of such a requirement in various regions where the DENR implements the CoV policy. Using region-specific pricing of labor and bamboo poles, the foreseen benefits of removing the CoV include higher income, avoided costs (on the part of landowners) like application and inspection costs, and other economic advantages associated with the increase in bamboo plantation areas. Computed as costs were the presumed higher forest protection cost and added expenditures that result from increased bamboo plantation areas supposedly encouraged by a less restrictive policy. The findings show that, for all the regions, the stream of incremental benefits (IBs) in the absence of CoV far exceeds the costs. The calculated benefit-cost ratios over a fifty-year study period at four discount rates (6%, 8%, 10%, and 12%) showed that the benefits of removing CoV consistently outweighed the costs. Hence, we prescribe that the CoV should no longer be made a requirement for harvesting bamboo from private lands.