Analyses of a Forest Drainage Experiment in Northern Ontario. II: An Economic Analysis

Abstract

Results of an economic analysis of a forest drainage experiment established near Iroquois Falls, Ontario, indicate that, from 1929 to 1969, the annual rate of return due to drainage of the better site increased from −2.7 to 3.4%. For the entire drainage area the annual rate of return increased from 2.0 to 2.2% and will increase for several years.Further analysis based on current drainage cost and projected future stumpage prices indicates that future rates of return from drainage of similar sites will be about 6%. Because of technological advances in forest drainage and savings realized in logging and transportation costs as a result of drainage, the expected future rate of return from the best drainable site could easily increase to about 10%.Whether such rates of return are sufficient to induce investment in drainage depends on other investment possibilities and on social, environmental, and political considerations regarding the various alternatives.