The Financial and Environmental Feasibility of the Plantation Based Pulp Industry of Indonesia

Glenn P. Jenkins HIID Harvard University

Ranjit Lamech Kennedy School of Government, Harvard University

Development Discussion Paper Number: 1995- 6

Abstract Paper and Paper pulp mills supported by timber plantations are emerging as one of Indonesia’s premier industrial sectors. This study focuses on the two key questions regarding the sustainability of the plantation pulp sector in Indonesia. The first question is whether the financial returns in this sector are sufficient and the risk low enough, to warrant large expenditures by the private sector in research, development, and fertilization so that wood can produce from the plantation in a sustainable manner? The second question is whether the level of profitability of integrated plantation pulp complexes is sufficient to cover the costs of the most effective pollution control technologies and production systems used in pulp industries around the world?

Prepared for: Environmental Management Development in Indonesia, BAPEDAL, Ministry of Environment, Indonesia. JEL code(s): H43 Key words: Indonesia, wood pulp production, integrated appraisal, economic impact, environmental impact, plantation based pulp production.

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