Key factors influencing the decision making in largesized timber plantation of local small households in vinh linh district quang tri province

VIETNAM NATIONAL UNIVERSITY OF FORESRY FOREST RESOUCRES & ENVIRONMENTAL MANAGEMENT FACULTY STUDENT THESISKEY FACTORS INFLUENCING THE DECISION MAKING IN LARGE- SIZED TIMBER PLANTATION OF

VIETNAM NATIONAL UNIVERSITY OF FORESRY FOREST RESOUCRES & ENVIRONMENTAL MANAGEMENT FACULTY

STUDENT THESISKEY FACTORS INFLUENCING THE DECISION MAKING IN LARGE- SIZED TIMBER PLANTATION OF LOCAL SMALL HOUSEHOLDS IN

VINH LINH DISTRICT, QUANG TRI PROVINCE

Major: Natural Resources Management Faculty: Forest Resources and Environmental Management

Student: Luu Thi Van Student ID: 1453092230

Class: K59 Natural Resources Management Course: 2014 - 2018

Advanced Education Program Developed in collaboration with Colorado State University, USA Supervisor: Dr Le Dinh Hai

Hanoi, October 2018

ACKNOWLEDGEMENTS

I am glad to have an opportunity to express my acknowledgements to many people involving

in the study, without whom I could not finish my study

First and foremost, I would like to express my deep sense of gratitude to respected supervisor Dr Le Dinh Hai from Faculty of Economics and Business Management, Vietnam National University of Forestry for his continuous support, patient guidance and encouragement throughout my research project Besides, I also want to thank to Mrs.Vo Thi Hai Hien, a lecturer from Faculty of Economics and Business Administration for her constructive suggestion during whole time I worked with my thesis

In addition, I would love to thank to many local people for their contribution to this project Special thanks to local people in Vinh Thuy Commune, Vinh Chap Commune, Vinh Long Commune and Vinh Ha Commune for providing helpful information and helping me at that time I took households survey in Vinh Linh district

The last but not least, my thanks go to my family, my dear friends for their endless love, support and encouragement to me throughout all my life

Hanoi, 2018

TABLE OF CONTENTS

Acknowledgements i

CHAPTER 1 INTRODUCTION 1

CHAPTER 2 STUDY GOAL AND OBJECTIVES 4

2.1 Goal of the study 4

2.2 Objectives of the study 4

CHAPTER 3 METHODOLOGY 5

3.1 Study site 5

3.1.1 Quang Tri Province 5

3.1.2 Vinh Linh district 6

3.1.3 Situation of plantation in Vinh Linh district. 8

3.2 Methodology 9

Definition of large-sized timber plantation or large sized-timber 9

3.2.1 Framework of factors influencing large-sized timber with long-term rotation of small household 10

3.2.2 Data collection 16

a) Secondary data collection 16

b) Primary data collection 16

3.2.3 Data analysis 18

CHAPTER 4 STUDY RESULTS 25

4.1 Economic efficiency comparison of small –sized timber and large-sized timber plantation. 25

4.1.1 Cost-benefit analysis of small-sized timber plantation 25

4.1.2 Cost-benefit analysis of large-sized timber plantation. 26

4.2 Descriptive statistic on surveyed households in Vinh Linh district 28

4.2.1 Characteristic of household head 28

4.2.2 Characteristic of household in Vinh Linh District. 31

4.2.3 Plantation activities of surveyed household in Vinh Linh district 32

4.2.4 Understanding of local people about large-sized timber in Vinh Linh district. 35

Knowledge of local people about large-sized timber plantation 35

Understanding of local people about policies related to large-sized timber. 36

4.2.5 Support for community for large-sized timber plantation 37

4.3 Correlation analysis of factors with decision of planting large-sized timber of households in Vinh Linh district 37

4.4 Key divers affecting large-sized-timber planting decision of surveyed households 39

CHAPTER V DISCUSION 41

5.1 1 Economic efficiency comparison of small –sized timber and large-sized timber plantation 41

5.2 Background characteristic of respondents 41

5.3 Characteristics of household planting plantation in Vinh Linh district. 42

5.4 Understanding of local people about large-sized timber plantation 44

5.5 Key divers affecting to the decision of local people on planting large-sized timber 44

5.6 Potential suggestion which may encourage local people to shifting from plant small-sized timer into large-sized timer with longer rotation 46

CHAPTER VI CONCLUSION 50

CHAPTER VII REFERENCES 1

APENDICIES 3

LIST OF TABLES Table 3.1:Standards to identify small-sized timber & large-sized timber of acacia

hybrid 9

Table 3.2:Survey sampling design in Vinh Linh District 18

Table 3.3: Dependent variables and independent variables 19

Table 3.4: List of dependent variable and potential independent variables 23

Table 4.1:Cost and revenue structure of small-sized timber plantation 25

Table 4.2: Cost-benefit analysis of small-sized timber plantation 26

Table 4.3: Cost and revenue structure of large-sized timber 27

Table 4 4:Cost-benefit analysis of large -sized timber plantation 28

Table 4.5: Descriptive Statistics of quantitative variables 29

Table 4 6: Relationship between gender of households head and decision on planting large sized timber 30

Table 4.7: Variables have strong relationship with decision of household on planting large-sized timber in Vinh Linh district 38

Table 4.8:Key divers affecting to the decision of local people on planting large-sized timber 40

Table 5.1: Economic efficiency comparison of small –sized timber and large-sized timber plantation 41

Table 5.2: Different between small-timber plantation and large-timber plantation 42

Table 5 3 Ranking of influential factors 47

LIST OF FIGURES

Figure 3.1: Potential factors effect decision of local people on planting large-sized

timber 6

Figure 4.1:Education level of household head in Vinh Linh district 30

Figure 4.2: Household wealth ranking at Vinh Linh district 31

Figure 4.3: Sources of capital of households at beginning of rotation 32

Figure 4.4: Lack of capital at 4 th -5 th years of plantation 32

Figure 4.5:Accessibility to the forest land 34

Figure 4.6: Sources of seedlings 34

Figure 4.7: Participation of local people in FSC project 35

Figure 4 8: Knowledge about large sized timber forest of households in Vinh Linh district 36

Figure 4.9 Understanding of local people about polies related to large-sized timber 36

Figure 4.10 Support from community for large-sized timber plantation 37

ABBREVIATION BCR Benefit- Cost ratio

CBA Cost Benefit Analysis

FAO Food and Agriculture Organization

FSC Forest Stewardship Council

IRR Internal Rate of Return

MARD Ministry of Agriculture and Rural Development

NPV Net present value

SPSS Statistical Package for the Social Sciences

SWOT Strengths, Weaknesses, Opportunities and Threats

VND Vietnam Dong

WWF Word Wild Fund

CHAPTER I INTRODUCTION

Because of unsustainable management and very high demand for conversion of forest land into others land for social-economic development, the forest area and forest quality have been continuously decreasing In 1943, Vietnam had 14.3 million ha of forests, with 43% forest cover; by the year 1990 only 9.18 million ha remained, with a forest cover of 27.2% (MARD, 2007) But from 1990 to the present, the Vietnamese government has taken many actions to conserve nature forest and increase forest cover again According to the database of Ministry

of Agriculture and Rural Development, total area of forest cover continuously increases from 27.2% to 41.19% in 2016.

The forest cover increasing includes all three forest categories: production, protection (for specific ecosystem services, e.g watershed management) and special use forests (protected areas, conservation), but the main contribution is several million ha of newly established plantations (Acacia, Eucalypt and Pinus) in production forest Currently, they cover more than 3.5 Million ha, with the prospect that plantations will cover more than 4.1 Million ha by 2020 (MARD 2015) These plantation forests, with mostly fast- growing species such as Eucalypts, Acacia, Styrax tonkinnensis, and Manglietia glauca, are mainly managed by state forest enterprises and private forest owners who, according to recent regulations, can have the full rights over investing and harvesting their plantation forests In fact, a majority of 2.5 million cubic meters annually cut in Vietnam’s plantation forests is of small-size young timber (7-8 years old) which is used mainly for pulp and paper, pit-prop, construction and wood-chip purposes (Nguyen, 2006)

Quang Tri is a province in Central Vietnam with one city, one town and eight districts

In general, topography of Quang Tri is very complicated including hills, mountains, lowland, coastal sand-banks and islands The main terrain is mountainous and hilly overlooking the sea

with high steep and fast flowing water which cause unpredictable flooding and landslide make production and daily life activities of local people very difficult Therefore, forest plantation, especially large-size timber forest plantation is very important because it will bring many benefits such as improving income of small households who take part in plantation activities, reducing the impact of natural disaster and protecting soil as well as environment Quang Tri province has total 473,981 ha in which total forested area is 231,653 ha accounting for 48.9 %

of total land The total area of plantation is 91,792 ha, in which 32,391 ha is plantation of small households Moreover, Quang Tri is one of the earliest provinces having FSC certified forest but the certified forest area is very small compared to the total plantation forest area (Hoang et

al 2015) There is only 861.8 ha of forest which got the certificate from FSC for sustainable forest management in total 91.792 ha of plantation in 2014

In recent years, many policies and projects of governance as well as international organizations were implemented such as Decree No 744/QD-BNN-TCLN on 18 April 2014 in Approving the Action Plan for Enhancing the productivity and value of panted production forest for the period 2014-2020; Decision No 38/2016/QD-TTg “Promulgating a number of policies

on forest protection and development, and supporting for investment in infrastructure construction and assignment of public-utility tasks to agricultural and forestry companies”; or group as a group certification project supported by WWF and IKEA to promote small households practice long-term rotation plantation, reduce young forest exploitation and transform form small-sized timber plantation to large-sized timber plantation with longer rotation

Besides that, many researches and projects related to large-sized timber plantation were published, mentioned about different aspects of the effectiveness of planting large-sized timber with longer- rotation like research of Nguyen Quang Ha in 2001 determined optimal rotation in planting material forests, or research of Nguyen Nghia Bien on development of large-sized

timber in Yen Bai province Research of Nguyen Thi Hoang Hai on Costs Comparison between FSC and Non FSC Acacia Plantations in Quang Tri Province, Vietnam in 2015 The results of those researches indicated that long-term rotation help local people have higher income, supply industry wood for wood furniture industry and provide environment protection function

For those reasons, I decide to conduct study on “identifying key factors influencing

large-sized timber with long-term rotation of local people in Vinh Linh distrct, Quang Tri province, Vietnam” in order to have better understanding about long-term rotation plantation

CHAPTER II STUDY GOAL AND OBJECTIVES

2.1 Goal of the study

Analyzing key factors influencing long-term rotation plantation of local people with Binary Logistic Model in order to provide potential suggestions in increasing large-sized timer with long-term rotation in Vinh Linh District, Quang Tri Province

2.2 Objectives of the study

(1) To compare efficiency of small –sized timber and large-sized timber by using Cost Benefit Analysis

(2) To identify key factors associated with household decision of local people to plant large-sized timer in long term rotation

(3) To provide potential suggestions which may encourage local people to shift from plant small-sized timer into large-sized timer with longer rotation

CHAPTER III METHODOLOGY 3.1 Study site

3.1.1 Quang Tri Province

Located in the middle of the country, Quang Tri is considered as an important traffic hub creating favorable conditions for the economic cooperation in the region, international transport, commercial developing, service and tourism Quang Tri is surrounded by Quang Binh province on the North, Thua Thien Hue province on the South, Laos on the West, and East Sea

on the East The topography of Quang Tri province is very various including hills, mountains, lowland, coastal sand-banks and islands Quang Tri province has an area of 4.739 km2, and population of 626.563 people (in according to statistics in 2015) and 10 administration units including Dong Ha city, Quang Tri town and 08 districts of Vinh Linh, Gio Linh, Trieu Phong, Cam Lo, Hal Lang, Dakrong, Huong Hoa and Con Co island district Dong Ha city is the political, economic, and cultural center of the province

Quang Tri province is located in the tropical climate zone with monsoon and affected

by West-South dry and hot wind The average temperature is varied from 200C – 250C The highest temperature in hot months of 40°C in lowland and 34°C - 35°C in low mountainous areas The lowest temperature in the year can be reduced to 8°C - 10°C in lowland and 3°C - 5°C in high mountainous areas The average annual rainfall is varied from 2,000 — 2,700 mm and average relative humidity is 70 - 80%.

The movement of economic and labor structures in the direction of concentrating on advantageous industries has contributed to the increase of social labor productivity in the period

of 2006-2010 from 12.1 million VND in 2005 to 31.4 million in 2010 (calculated by the current price), reaching the ratio of 21%/year The growth quality of the economy has been significantly improved The per capita GDP (current price) in 2010 reaches 16.4 billion VND, 2 times higher than that of 2005, which speeds up the economic development and increases the accumulation

Figure 1: Map of Vinh Linh district

First of all, Vinh Linh district is located in the North of Quang Tri It is representative for almost types of topography in Quang Tri province Secondly, forest plantation practice is very developed in Vinh Linh With Cam Lo and Huong Hoa district, Vinh Linh is one of three districts have the highest area of forest plantation In addition, Vinh Linh is one of districts have the highest area of forest plantation got FSC certification

b) Natural conditions

Vinh Linh with characteristics of tropical monsoon climate with marked sign of typhoons, floods in winter and hot dry, drought in summer; the temperature difference between the two seasons is about 10 - 20°C The average annual temperature about 25.2°C The highest temperature in summer above 34°C and lowest temperature in winter is 9°C Average annual precipitation is 2.400mm/year

c) Land and land use

Since the topography is quite complex and various, Vinh Linh district has different types

of soil Vinh Linh is located on a geological background with three main groups (Macsma, Metamorphic and sedimentary) through the process of weathering and accretion formed many types of soil with different properties and potential There are five sub-areas of land and terrain The yellow red soil on clay and metamorphic rocks, yellowish soil on sand stone, alluvial soil without compensation annually, Gleyic Fluvisols and reddish brown soil on basalt

According to “Planning Report- Forest Protection and Development period 210-2020”

of Vinh Linh district The land use state in 2020, forest holds 51.1%, agriculture land holds 28.86%, land for other purpose holds 13.90% and unused land account for 5.3% The forest land accounts for the highest percentage in production land, it means that plantation plays important roles in social-economic development in Vinh Linh district

d) Social - economic characteristics

According to People Committee of Vinh Linh district, the total population in Vinh Linh district is 93.909 people include 2.708 people belong to Van Kieu ethnic and the polulation density is 136 people/km2 There are 25.151 households, 19 communes, 3 towns, and 195 villages in whole Vinh Linh district The percentage of people in labor age (from 15 to 59) in Vinh district is 69% in which female labor account for 51.37% and male labor account for

48.63% Average GDP of people in Vinh Linh district is estimated around 13.1 million VND/person/year

3.1.3 Situation of plantation in Vinh Linh district

In the 1980s, many forest plantation project were launched such as PAM program (1976-2000), Program 327 (1993 – 1998, Five Million Hectare Reforestation Program (1998 – 2010), and so on.… in Vinh Linh district Following that, households who had allocated forest land could receive support from projects (could be financial, silviculture training, fertilizer or seedlings) And the results of those project turn out very good Bare land was recovered by plantation, livelihoods of local people were increased and living standard of local were improved a lot

These days, there are more than 20.000 ha of plantation, and 2.463 ha of bare land were plan use for plantation purpose in whole Vinh Linh district The annual harvest output increases years by years and the average output is around 35.000m3/year However, most of harvested wood is used for making paper with low price compared to logs wood use for making furniture The average output of 1 ha of plantation range from 45-50ton with price for 1 ton of woodchip

is VND 1,000,000 , so the average revenue from 1 ha of plantation is about 45-50 VND million

From 2007, the first time FSC project was introduced in Vinh Linh district, Vinh Thuy

is the first commune chosen to run FSC project In 2011, 118 households belong to Vinh Thuy commune (Vinh Linh), Trung Son (Gio Linh) became the first group of households had certificated forest with total area of plantation got certificated were 312 ha However, the area

of forest has the certificate still very small compare to total area of plantation in Vinh Linh district

3.2 Methodology

Definition of large-sized timber plantation or large sized-timber

Large –sized timber and small sized timber are classified by many different purposes of use and by the difference in diameter or height of tree species

 According to FINNISH FOREST ASSOCIATION (FFA) of Finland, there are two

grades of round wood timber for each tree species: logs and pulpwood, or small-diameter wood Pulpwood is derived from small-diameter trees and the crowns of large trees Large-sized wood

of poor quality is also used as pulpwood Pulpwood is used to manufacture pulp Saw-timber tree is a tree which yields at least one log, i.e., a straight four-meter stem whose minimum top diameter is 15 cm

 In Vietnam, we can find different standards of large-sized timber in some legal

documents

a) Standard for large-sized timber is identified as round wood have diameter equal or larger than 15 cm in decision 744/QĐ-BNN-TCLN: Approved Action Plan Improving Productivity, Quality, And Value Of Forests Planted Phase Manufacturing 2014-2020

b) Or standard for specific tress species such as Acacia hybrid (A.mangium x A-

auricculiformis)

Table 3.1 Standards to identify small-sized timber and large-sized timber of hybrid acacia

Indicator Small –sized timber Large –sized timber

Rotation <10 years From 10 years

Diameter < 15 cm ≥ 15cm ( top diameter ); length ≥2m

(Source: TCVN 11567-1:2016)

3.2.1 Framework of factors influencing large-sized timber with long-term rotation of small household

Figure 3.1: Conceptual model of potential factors effect decision of local people on

planting large-sized timber

(1) Household characteristics factors

There are many studies indicated that household characteristics such as age and sex of household head, education level of household head can affect decision of local people in planting forest especially long-term rotation (Zenebe Gebreegziabher at el, 2010; Bhim Adhikari, 2003; Yusuph J Kulindwa, 2016) Yusuph J Kulindwa also shown family sizes have negatively and significantly affected households’ tree planting behavior that increase the size

of a household by one person is likely to decrease the possibility of households’ tree planting

by 21% In addition, education level is considered as a key factors for all levels of sustainable forestry practice, and education level have positive relationship with environment awareness, knowledge of tree planting techniques and tree planting ethusiam (Gorden et al 1999; Simmons

et al 2002) However, the farmers’ age, the number of years of education of the farmer, the

number of household members, the distance to the tree stand from the house, and household assets and expenses were not significantly correlated with the grade of silvicultural activity in

any of the case studies in Indonesia (Markku Kanninen, 2013)

(2) Characteristics of farm and biophysical factors

Another factors making small household have difference in length of rotation term or long-term rotation is various factors related to characters of plantation farm such as area

(short-of forest land, tenure distance from house to farm, infrastructure as well as biophysical factors like soil types, slope, climate conditions)

Tree planting requires land, but the poorest farmers in the tropics generally have very little ownership or access to private land, or only very small areas of land, such that they have little choice but to plant staple food crops that provide annual returns, instead of the relatively slow growing trees Hence, it is often found that farmers with larger areas of land tend to plant and manage trees more than the those with limited land (Markku Kanime, 2013)

Site conditions, including the soil characteristics and climatic conditions, affect the success of tree planting Not all of sites are suitable for tree planting or for all species, therefore,

it is crucial to match the species with the site conditions On the other hand, tree planting can often be a feasible option to make a use of marginal lands where agricultural crops are not suitable, and in fact, tree plantations are generally relegated to such marginal lands

(3) Silvicultural knowledge and skills

A silvicultural system is a planned program of vegetation treatment during the entire life of a stand Silvicultural systems typically include three basic components: intermediate treatments (tending), harvesting, and regeneration There are arguments between different scientists about how knowledge affects tree planting Despite a large body of traditional knowledge on tree planting, there is a general lack of knowledge and skills related to tree planting and management amongst farmers (Markku Kanninen, 2013) Smallholders in

Indonesia and other developing countries in the tropics often manage their timber plantations using poor silvicultural practices with low levels of labor inputs, which lead to low quantities and quality of timber (Harrison and Herbohn 2001b, Maturana et al 2005) In addition, quality

of seed used, techniques of planting and tending are the concern of local people in Yen Bai, Vietnam when they mention about silvicultural skills and knowledge of planting short- term rotation Most farmers/forest growers plant forests according to their own experience since technical support from local authority is limited It is likely that most forest growers, under pressure of timber demand, harvest trees when they get the highest growth rate (i.e at a premature age) Nguyen Nghia Bien, 2006) The lack of thinning and relatively short rotation lengths, especially in the teak case, also influences the wood quality Longer rotations are essential if the aim is to produce good quality logs for high-end uses, as longer rotations produce higher diameter stems with more heart wood (Markku Kanninen, 2013)

(4) Economic factors/ Market and Timber price

The economic factors influencing decision of small household are those that impact on investment and benefit return of timber According to FAO (2002), production cost and log prices are two key factors affecting long rotation Eucalypt plantation (20-40 years) in New South Wales The production cost is cover land prices (land prices have risen sharply where there has been large scale planted by a number of competing players); establishment costs (establishment costs for eucalypt plantations tend to be high because of their sensitivity to weed competition and the lack of cost effective residual herbicides that can be legally used); maintenance costs (because of the fire protection costs); harvesting costs (harvesting integrated eucalypt plantations has been a little more expensive than other species because the open crown allows a substantial understory to develop); transport costs, combination of all the costs make Australia has relatively high plantation growing costs

According to Nguyen Nghia Bien (2006), rate of recover of investment, financial status

of farmers and credit institution, market and timber price are three important factors making small household choose harvest small-sized timber

Rate of recover of investment

According to farmers/forest growers, growing small timber is preferred as they can get quicker return and invest it in the next rotation (about 6-8 years long) to get another cumulative income instead of getting only one-off income if trees are left to grow up to large-sized timber( Nguyen Nghia Bien, 2006) However, many researches and legal documents indicated that long-term rotation can bring more benefits for local people If forest growers sell wood chips or wood pulp (short-rotation) the value is only around 700,000 - 800,000 VND/ton Meanwhile, if local people transform from short-rotation to longer rotation, the diameter of tree will increase and have higher economic value For example, D = 15 cm have price of 1.1-1.2 million VND/m³, D = 25 cm have price of 1.8 -2 million VND/m³, D =

35 cm have price of 3 million VND/m³ (MARD, 2014) But small households often choose harvest small sized timber (use for wood chips or woof pulp) instead of leaving tree growing because they can get money from this product even it very low

Financial status of farmers and credit institutions

For the viewpoint of many households, the most important of these functions is the ability to provide for the households with basic food and cash needs (Belsky 1984, Ponce and Bangi 1988) They need financial resources not only for investing in forest planting, but also for covering daily basic needs Since most forest growers are poor, shortage of financial resources strongly affects their cutting decision With many Filipino farmers living below the poverty line, their ability to invest in long-term projects is strictly limited

In terms of investing in commercial timber plantation, forest growers need 8-10 million VND (USD 500 – 625) per hectare However, forest growers usually face the following problems:

 Access to bank loan is very limited The state bank gives only 50 percent of the amount requested if it is larger than VND 10 million This loan undoubtedly

cannot meet the need of those who have more than one hectare of forest land

while access to state bank loan is limited, loan from commercial/private banks is

Adapted from Nguyen Nghia Bien (2006)

Market and timber price

Farmers have an incentive to manage their timber plantations only if they are relatively sure that their efforts will benefit them in the future If the markets are insecure or lacking, farmers do not have any incentives for improving silvicultural management There are two main factors complicating the markets for small-scale wood production namely low quantity and quality These complicating factors, especially applying to farmers with small land areas and poor silvicultural management skills

The timber processing industry and export of forest products have vigorously developed

in recent years (exports of wooden products increased from USD61 million in 1996 to USD1,034 million in 2004 and up to USD1,500 million in 2005) (MRAD, 2006), making increase in demand for large-sized timber This change can promote small households prolong length of plantation rotation to get higher quality and quantity of timber and get higher economic value of plantation

According to the representatives of wood-processing companies, the taste and requirements for timber products also change every day Sometimes, these companies have to refuse large orders from international dealers because the latter require that timber products must be made from those timber species hardly found in local forests or elsewhere This means the price for timber can also vary according to demand for certain products at a particular moment (Nguyen Nghia Bien, 2006)

(5) Social factors

Beside factors related to characteristics of household, silvicultural techniques and economic factors; social also consider as a key diver of planting long-term rotation Those factors may include community support, employment, and high expectation of environmental practices Table below shows how social factors influencing investment in long term rotation

in New South Wales

Social factors Which encourage investment Or discourage investment

Community

support

Widespread support for native species plantations including conservation groups

Community may have unrealistic expectation especially with regard

to full domestic processing of pulpwood

Forestry expected to fulfil higher environment standards than farmers

Employment

High employment numbers in forestry sector relative to other land uses reinforces community support

Employment costs - both numbers and cost may not be internationally competitive

Native species

habitat

Risk that endangered species found

in plantations - possible expectation that plantation will be reserved from harvest

Urban forestry

perception

Opportunity to educate public - (sustainable use of renewable resource) versus other materials and so on

Native species plantations look like native forest - risk of inability

to harvest or manage to optimize timber production

(Source: FAO- Forest Plantations Working Papers, 2002)

(6) Institutional and Policies

Zenebe Gebreegziabher (2010) claimed thatinstitutional issues, such as perception of tenure security, tend to be more important in determining household tree planting For example, policy measures or interventions that enhance not only the security of existing land tenure and support greater education of the household head would, at the same time, but also household tree planting Another policy that influences the most farmers’ decision is on banking credit Most private forest growers do not either have access or a limited access to credit In current banking arrangements, interest rates are still high and loan term is far too short All these conditions do not encourage local farmers to invest in forest plantation, especially to wait for large-sized timber (Nguyen Nghia Bien, 2006)

3.2.2 Data collection

a) Secondary data collection

Secondary data collection is used in this study to build theoretical models of key divers effecting decision of small households in planting large-sized timber and also have better understand about status of forest plantation and large-sized timber plantation in Vinh Linh district Secondary data were collected from Communal People Committee of four communes Vinh Thuy, Vinh Chap, Vinh Long and Vinh Ha, as well as gathered secondary information from other reports, studies and books

b) Primary data collection

 Questionnaire design

Questionnaire is designed base on framework of factors influencing large-sized timber with long-term rotation of small household Pre-testing of the questionnaire will conduct to the elimination of the errors that associated with survey research and the response to questionnaire pre-testing resulted in revision of questions to improve the data quality

- Interviewing the local people (using questionnaire) and key informant people

- Using Participatory Rural Appraisal method (PRA)

 Sampling design

 Identifying number of sample size

Base on theoretical framework, there are 6 potential factors that influencing decision of small household in planting long-term rotation (part 3.2.1:Framework of factors influencing large-sized timber with long-term rotation of small household)

Applying Binary Logistic Regression Model to accessing key divers affecting decision making of small household in long- term rotation plantation practice Since minimum sample size is calculated by following formula (Tabachnick & Fidell,2007):

n > 50 + 8*m

In which n: sample size

m: number of independent variables

Therefore, total number of minimum sample size is n= 50+ 8*10 = 130

 Sampling design

Stratified random sampling method were used to design sampling in 4 communes at which have highest area of plantation in Vinh Linh district The households in four communes were chosen by two indicator are planting large-sized timber and planting small-sized timber Conducting a household survey in 4 representative communes is Vinh Thuy, Vinh Chap, Vinh Long and Vinh Ha There were 134 households including 79 households planting short-term rotation and 55 households planting long-term rotation

 Survey sampling design in Vinh Linh District

Table 3 2: Survey sampling design in Vinh Linh District

Commune Village

Surveyed household in Vinh Linh district

Total Planting

 Descriptive statistics method

Descriptive statistic method is used to describe the basic features of the data in a study

It provided simple summaries about the sample and the measures Furthermore, raw data after processing with Microsoft Excel, was used to draw graphic to provide the basic of virtually every quantitative analysis of data

In this research, the continuous variables were analyzed by comparing mean by the independent –sample T-test In case of study, the subject was divided into 2 groups, so that any difference in responding is due to the treatment (or lack of treatment) and not to other factors The grouping variable would be decision of small household on planting large-sized timber (1= planting large -sized timer; 0 = not planting large-sized timber) Test variables would be

determined as age of households, number of labor in a household, cost and revenue of planting tree and other factors which is quantitative variable

Qualitative variables would be analyzed by calculating frequencies, making cross- tabulation tables in order to identify the association between indicators (dependent variable) and divers (independent variables)

Table 3.3: Dependent variables and independent variables

VARIABLES

Dependent variable Decision of small household on planting

large-sized timber plantation

Independent variables

1 Education level of household head

2 Household wealth ranking 3.Forest land area

4 Knowledge about large-sized timber

5 Distance to the field

6 Area of forest affected by tropical typhoons s

7 Sources of seedlings

8 FSC Project participation

9 Support from community

10 Policy understanding

 Cost- Benefit Analysis

CBA analysis is used to analyze indicators, performance, economic and financial efficiencies for both groups of household practice small-sized timber and large-sized timber It takes into account indicators such as net present value (NPV), internal rate of return rate (IRR), the benefit cost ratio (BCR)

 Net present value (NVP) is the difference between the present value of cash inflows

and the present value of cash outflows over a period of time NPV is used in capital budgeting

to analyze the profitability of a projected investment or project

Formula of NPV:

0 (1 )

n

i i i i

B C NPV

 Internal Rate of Return (IRR)is a metric used in capital budgeting to estimate

the profitability of potential investments Internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows from a particular project

i

B Ci NPV

 Benefit-Cost Ratio (BCR) is an indicator used in cost-benefit analysis, to show the

relationship between the costs and benefits of a proposed project, in monetary or qualitative

terms

Formula of BCR:

In which: Bi: Benefit/ Revenue obtained by the project in year i

Ci: Cost spent by the project in year i r: Discount rate

n: The time of the project If: NPV>0 Efficiency project

NPV= 0 Break Even NPV< 0 Not efficiency project

0 0

( ) (1 )( )

(1 )

i i i

i n i i

i i

B

BCR

C NPV C

Assume that rotation of large-sized timber is 10 years and rotation of small-sized timber

is 5 years It mean that one rotation of large-sized timber equal to two rotation of small sized timber

 IBM SPSS Statistics 23 will use for data analysis

Binary Logistic Regression Predicting the presence or absence of a characteristic or outcome based on values of a set of predictor variables This procedure is similar to linear regression but is suited to models in which the dependent variable is dichotomous

Bivariate correlation

According to IBM SPSS version 23, “The Bivariate Correlations procedure computes Pearson's correlation coefficient, Spearman's rho, and Kendall's tau-b with their significance levels Correlations measure how variables or rank orders are related Before calculating a correlation coefficient, screen your data for outliers (which can cause misleading results) and evidence of a linear relationship Pearson's correlation coefficient is a measure of linear association Two variables can be perfectly related, but if the relationship is not linear, Pearson's correlation coefficient is not an appropriate statistic for measuring their association.”

In which: Bi: Benefit/ Revenue obtained by the project in year i

Ci: Cost spent by the project in year i NPV: Net present value

n: The time of the project

If: BCR > 1 Efficiency project

BCR = 1 Break Even BCR < 1 Not efficiency project

Correlation coefficients range in value from –1 (a perfect negative relationship) and +1 (a perfect positive relationship) A value of 0 indicates no linear relationship

In this study, Pearson’s correlation is used to finding the relationship between dependent variable with each independent variable The dependent variable has correlation with independent variable as |x| > 0.3 (x is the Pearson’s Correlation value) The compatible variables

is used for the next step

Binary logistic regression

Logistic regression is the statistical technique used to predict the relationship between predictors (our independent variables) and a predicted variable (the dependent variable) where the dependent variable is binary (e.g., sex [male vs female], response [yes vs no], score [high

vs low], etc…) In this study, binary logistic regression model procedure is applied to determine the key factors affecting decision of small households in planting large- sized timber in Vinh Linh district, Quang Tri Province

Binary logistic regression procedure which contains two variables Dependent variables have to have two value (0= “No”; 1= “Yes”), whereas the independent variables can be contained more than two values The list of dependent and independent variables is showed in table below

To determine the factors, the brief model in which the variables were tested by Pearson correlation would be used, the results in which significant values were less than 0.05 (5 %) were chosen as a factor influencing to decision of small households in planting large-sized timber in

a 95% confidence level

Binary logistic equation function is:

Table 3 4: List of dependent variable and potential independent variables

Dependent variable

1 Decision Decision of small household on

planting large- sized timber

Silvicultural techniques and skills

of small house about large-sized timber plantation

1= “yes”

2= “no”

5 Distance to the field Average distance from house to the

forest area of household

1= “Yes”

0= “No”

9

Support from community

Support from community related to large-sized plantation activities

1= “Yes”

0=“No”

CHAPTER IV STUDY RESULTS 4.1 Economic efficiency comparison of small- sized timber and large-sized timber plantation

The market price of small –sized timber and large-sized-timber is very different, even price of logs wood also depends on diameter of logs The average price for chips wood (small-sized timber) is 1,000,000 VND /ton, this price includes harvesting labor and transportation cost While the price of log depends on diameter of logs If the diameter ranges from 10 – 14

cm, the price is about 1,100,000 VND/m3 and the price from logs with 15-cm diameter is 1,300,000 VND/m3 But it does not include harvesting labor and transportation cost that are covered by forest owners

4.1.1 Cost-benefit analysis of small-sized timber plantation

For small-sized timber plantation, average business rotation is 4.5 years The major cost was allocated for forest establishment (site preparation, seedlings, digging holes, labors, fertilizer) The sources of income totally come from revenue of selling plantation in the 4th or

5th year The average total revenue was over 45,127,000 VND/ha

Table 4.1 Cost and revenue structure of small-sized timber plantation

The table below shows the result of cost- benefit analysis of small-sized timber plantation The net present value was 44,519 million VND /ha in 5 years, BCR was quite high

at 3.401 This mean that, on average, farmer gained 3.401 unit of revenue from one unit if cost incurrent The IRR reached 45% at the discount rate level of 5% At the discount rate equal to 45%, NPV will be equal to zero The current discount rate is much lower than IRR, thus local people can invest in small sized timber

Table 4.2 Cost-benefit analysis of small-sized timber plantation

Year Total cost

(VND/ha)

Total benefit (VND/ha)

Net present value (VND/ha)

4.1.2 Cost-benefit analysis of large-sized timber plantation

The business rotation of large-sized timber is 2 times longer than small sized timber, around 8 to 10 years Unlike small-sized timber plantation, the major cost of large-sized timber was allocated for planting and harvesting in the first year and the last year of rotation There are two main sources of income from thinning in 5 years and harvesting at the last year of

rotation And the average total revenue for large-sized plantation was around 273,133,000 VND million

Table 4.3 Cost and revenue structure of large-sized timber

Table 4.4 Cost-benefit analysis of large -sized timber plantation

4.2 Descriptive statistic on surveyed households in Vinh Linh district

4.2.1 Characteristic of household head

Age of household head

There are totally 134 respondents were interviewed in study site Table 4.5 illustrated the descriptive statistics for twelve quantitative variables Those variables are divided into 3 different groups which are characteristics of household head is “Age of household head”, characteristics of household including “Total member of household”, “Members practice plantation”, “Total household income per month” and remain eight variables describe planting activities of surveyed households The age of the youngest household head is 24 years old, while the age of the oldest household head is 85 years old and the average age of household head that were interviewed about 57 years old The result indicated, almost people practice