Saturday, April 7, 2018

Back of the Envelope Calculations - Forestry can be bigger growth driver than Hydropower Sector

The above is word for word quotation by Phuntsho Namgyel, author of Forest for Gross National Happiness.

Wikipedia explains “back-of-the-envelope calculations” thus:

"A back-of-the-envelope calculation is a rough calculation, typically jotted down on any available scrap of paper such as an envelope. It is more than a guess but less than an accurate calculation or mathematical proof." 

However we may wish to explain it, the following maths by Phuntsho Namgyal is certainly a thought provoking maths.

According to NFI (National Forest Inventory) 2016, we have a timber reserve of 1001 million m3. The national forest added net 472 million m3 since the first NFI in 1981 with average annual increment of 13.50 million m3 (2016 - 1981 = 35 years).

An increase in Growing Stock is an indication  of a maturing forest and/or more areas brought under forest cover.

The forestry share of GDP in 2016 was 2.68% or Nu. 4 billion. We removed in the year about 0.39 million m3 of wood which is 0.04% of the Growing Stock, or 2.9% of net annual increment.

An annual increase of wood harvest from 0.39 million m3 to:

1 million m3 = Nu. 10 billion
2 million m3 = Nu. 20 billion
3 million m3 = Nu. 30 billion
4 million m3 = Nu. 40 billion
5 million m3 = Nu. 50 billion

5 million m3 of wood extraction amounts to 0.5% of growing stock or 37% of net allowable increment, way below the sustainable harvest level.

The hydropower revenue in 2016 was Nu. 19.89 billion which was 13.38% of GDP.

Technically speaking, forestry has tremendous potential to be bigger growth driver than hydropower sector.


I might add: No 10% interest payable either!!

Ofcourse, it is a back-of-the-envelope calculations - but even if only half the maths is correct, we would still come out smelling like roses.

A most intriguing maths indeed!


  1. I may add...

    The national goal is to be economically self-reliant by 2020. The target year is just two and half years away, and by all indications it looks we are a decade away from achieving the goal. We are still an aid dependent country with donor grants and loans financing over 40% of the annual government budget. Further, we face large current account deficits, high public debt, underdeveloped private sector, rural-urban migration, high youth unemployment rate, stagnant Government pay and human capital flight.

    We exported wood products worth Nu. 0.35 billion in 2015 but imported over six times more wood worth Nu. 2.60 billion. This for a country sitting atop a huge timber reserve is an indefensible act, almost bordering criminal when viewed against the background of the many economic woes we face as a country and people.

    Sustainable use of forest is good for our natural environment. An increase in growing stock is an indication of a maturing forest and/or more areas coming under forest cover. An expanding and overstocked forest is a serious threat to biodiversity conservation and wildlife habitats, a cause for mega-fires, and is known to dramatically change hydrology (e.g. decrease groundwater recharge and stream flow). Further, economic impact of revenue from forestry is often felt most at the local level and is a great employment generator, thus inherently inclusive and green economy.

  2. Another point...the timber being extracted is "old growth" and commands a premium. We are wasting it as construction material (shuttering etc). If we value-add and market it as a premium product from Bhutan made using old-growth timber, we could earn good revenue.