Cost and benefit analysis of water control structure in plantation forest : case study in Banyuasin district, Indonesia

Development of plantation forests grows rapidly intropical countries including in Indonesia. These trends occur due to the decreasing of wood supply from natural forest, managing of fast growing species that is relatively easy and high yield from fast growing species. These also make plantation forests have an important role in forestry sectors especially to provide raw materials for pulp and paper industries since the production of natural forest cannot guarantee the sustainability of wood-based industries in tropical region.Due to scarcity of arable land, there is a rising attention to develop plantation forest in lowland peat swamps. Nevertheless, these area need to have a proper drainage to make itsuitable to be cultivated. Since peat land area is a fragile ecosystem, water management system developed in this area is not only as drainage water but also as a water control. Moreover, it has to balance between the water level to support for optimal plant growth andwater level to minimize environment degradation. Water management system pertain application of water control structure that can fulfill functions as a drainage water and water control. Installation of water control structure can draw immense expense that should be considered. In consequence, cost and benefit analysis that compare between applying water control structure and without applying water control structure can give significant effect on rational decision making in installation of water control structure that is economically feasible to be applied in the study site.This study was conducted at Resort Simpang Sampan in Sumber Hijau Permai plantation forest, which is located in Banyuasin District South Sumatra Province Indonesia. Geographically, it is located at: 104°15' - 104°40' east longitude and 1°55' - 2°15' south latitude. The objectives of this study are: to compare benefits before and after application of water control structure; to analyse cost and benefit analysis in each alternatives in plantation forest; and to give recommendation for the most economic alternative of water control structure.There are three parameters which are usually used in cost and benefit analysis namely net present value (NPV), benefit cost ratio (BCR) and internal rate of return (IRR). Five alternatives are calculated using these parameters as following: alternative without application of water control structures, alternative which using wooden flap gate and culvert/existing water control structures (Alternative A), alternative which using wooden flap gate, culvert and stop logs (Alternative B), alternative which using fibre flap gates (Alternative C) and alternative which using iron flap gates (Alternative D).From the analysis result, there is a significant difference in yield before application of water control structures and after application of water control structures. In average, yield before application of water control structure is around 100 ton/ha and after application of water control structures is 187 ton/ha. From the difference in yield increment, it is obvious that application of water control structure can increase yield in the study area. It means that the existence of water control structure is crucial to regulate and maintain water level which is needed by the plants to support optimum yield. Besides the yield increment, other benefits gained from reducing environmental degradation. The installation of water control structures can reduce peat subsidence rate, avoid inundation and water logging and avoid forest fire risk. From the result analysis, it can be concluded that installation of water control structures have a positive impact for plantation forest which can be reviewed from yield increment and the benefits gained by the plantation forest company which can exceed the cost of water control structures installation. The result of computation from cost and benefit analysis show that Alternative B which using wooden flap gate, culverts and additional stop logs show net present value of Rp. 31,192,000,000 (4%), Rp. 25,761,000,000 (8%) and Rp. 21,653,000,000 (12%). Internal rate of return is 16 with ratio of benefit and cost of 69, 62 and 56 at 4%, 8% and 12% discount rate respectively. These result show the highest performance compared with other alternatives. Therefore, it is recommended to install additional stop logs in the study area