2015, Volume 23, Paper 6
ISSN: 1883-5675

Plantation forestry and economic development in the Tiwi Islands

John Hicks
G.P. Samsa
Bill Malcolm

The Tiwi Islanders currently have 30,000 ha of mature Acacia to harvest. They have relatively small landowner debt to service, an established port and confirmed buyers. Re-investment of the cash returns from the current harvest into more plantation forestry to secure future community benefit is not a compelling attraction; re-investing these revenues to grow-out Acacia over further rotations is unlikely to benefit landowners as much as investing the proceeds in a sovereign wealth fund. In this paper, a social benefit cost framework is used to appraise the potential contribution to Tiwi Islanders of plantation forestry on the Melville Island. Analysis of the priced benefits and costs of investment of a ten year cycle of A.mangium under most likely yields and prices indicates that the investment in Acacia plantation forestry has a 35 per cent probability of earning a 4 per cent p.a. or greater real return on capital. To double the odds to two chances in three of earning the annual required return on capital of 4 per cent real return on capital, an additional $100m of unpriced benefits need to be generated over the forty years life of the plantation rotation. This would require unpriced annual benefits of $5.1m or $2550 per Tiwi Islander.

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