Are community-based forest enterprises in the tropics financially viable? Case studies from the Brazilian Amazon

Community-based forest management is an integral component of sustainable forest management and conservation in the Brazilian Amazon, where it has been heavily subsidized for the last ten years. Yet knowledge of the financial viability and impact of community-based forest enterprises (CFEs) is lacking. This study evaluates the profitability of three CFEs in the Brazilian Amazon: Ambé, an industrial-scale, upland forest operation producing logs in a national forest, in Pará state; ACAF, a small-scale operation in flooded forests producing boards with a portable sawmill in Amazonas state; and Mamirauá, one of 30 CFEs in a reserve in Amazonas state producing logs and boards in flooded forests. Costs for each CFE were compiled by forest management activity and cost type. Annual total costs were calculated as the sum of fixed and variable costs and then subtracted from total revenue to obtain annual profit. The annual rate of return on investment was calculated by dividing profits by total costs. The Ambé and Mamirauá cases were profitable, demonstrating rates of return of approximately 12% and 2%, respectively; the ACAF case was not profitable. This study illustrates the benefits of cost-sharing among CFEs, and the potential return for investments in small and large-scale community forestry.

► Large and small scale community forest enterprises can be profitable. ► Timber production is an important income source for community members. ► Cost sharing through cooperatives and producer groups improves financial viability. ► Technical assistance and processing are significant costs for community enterprises.