Vol. 120 No. 1 (2026)
Research Papers

Cost–Benefit and Profitability Assessment of Land Use Transition from Agriculture to Plantation Forest in Bolosso Sore and Hadero Tunto Districts, Southern Ethiopia

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  • Deginet Berhanu,
  • Gemedo Furo,
  • Gezahegn Seyoum
Deginet Berhanu
Ethiopian Forestry Development, Hawassa Center, Hawassa, Ethiopia
Gemedo Furo
Ethiopian Forestry Development, Hawassa Center, Hawassa, Ethiopia
Gezahegn Seyoum
Ethiopian Forestry Development, Hawassa Center, Hawassa, Ethiopia
DOI: https://doi.org/10.36253/jaeid-19604

Published 2026-06-29

Keywords

  • Cost–Benefit analysis,
  • Crop profitability,
  • Ethiopia,
  • Eucalyptus plantation,
  • Land use conversion,
  • Net Present Value,
  • Smallholder economy
    • ...More
    Less

How to Cite

Berhanu, D., Furo, G., & Seyoum, G. (2026). Cost–Benefit and Profitability Assessment of Land Use Transition from Agriculture to Plantation Forest in Bolosso Sore and Hadero Tunto Districts, Southern Ethiopia. Journal of Agriculture and Environment for International Development (JAEID), 120(1), 65–86. https://doi.org/10.36253/jaeid-19604

Copyright (c) 2026 Deginet Berhanu, Gemedo Furo, Gezahegn Seyoum

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

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Abstract

Rapid land-use transitions from crop farming to plantation forestry are reshaping rural economies in Ethiopia, driven by declining agricultural productivity, rising demand for wood products, and farmers’ preference for low-risk income alternatives. Eucalyptus dominates due to fast growth and high market value. This study assesses the economic viability of converting cropland to eucalyptus in Boloso Sore and Hadero Tunto by comparing tree- and crop-based systems. Data from 240 households were collected via surveys, interviews, focus groups, and field observations (multistage sampling). Cost–benefit analysis used NPV, BCR, and IRR at an 8% discount rate. Eucalyptus plantations yield higher long-term profits with lower labor: NPV 458,577.05 ETB, BCR 16.25, and IRR 66%. Crops provide short-term food and cash: NPV 388,319.97 ETB, BCR 16.36, IRR 203%. Sensitivity tests show plantation forestry is more robust across price, cost, yield, and discount-rate changes. As discount rates rise from 8% to 14%, NPVs fall for both, but plantations remain higher, converging only around 14.5%–15%, beyond which crops may gain advantage under very high capital costs. Under broader sensitivity scenarios including variations in price, production cost, and yield the plantation system demonstrates greater resilience due to its large periodic revenues, which buffer moderate market and productivity fluctuations. In contrast, crop-based agriculture is more vulnerable to input cost increment and short-term yield instability, although it is relatively less sensitive to extreme discount rate increases. Overall, within realistic ranges (8–14%), eucalyptus plantations remain economically superior despite food-security and ecological trade-offs.

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