Investment Planning and Project Evaluuation in Forestry

Whenever a number of development projects are propsed to be inplemented but the resources are limited, it is necessary to select a few out of the many. In this document, an effort has been made to assess the role of project evaluation as a tool of decision criteria. Besides economic feasibility, social objectives have to be taken into consideration in selecting projects. The use of market price and shadow price in social benfit cost analysis has been explained and the five components of an economic frame work viz. opportunity cost of capital, social rate of discount, accounting price of investment, labour and foreign exchange are discussed. Benefit-cost-Ratio, internal Rate of Return and Net Present value are the three evaluation criteria used in the project evaluation technique. Sensitivity analysis for project uncertainities have to be done in evaluation of projects. The necessity of building up adequate skill for project formulation and evaluation in each sector in the State is highlighted.