Comparative profitability analysis of land uses between Eucalyptus woodlot and crop production: evidence from Dangila Woreda, Northwest Ethiopia

This study assessed the financial profitability of two land use systems (Eucalyptus versus crop production) in Dangila Woreda, where there is a significant shift toward Eucalyptus woodlots. The expansion of Eucalyptus on arable land competes with food crop production and threatens household food security in the study area. Previously, land use allocation was not based on systematic feasibility assessments. This study evaluated the profitability of the two land uses using financial indicators (NPV and BCR). A multi-stage sampling technique was used to select 316 respondents from four randomly selected kebeles. To evaluate financial profitability, both primary and secondary data were used, including focus group discussions, key informant interviews, and household surveys. The collected data were analyzed using descriptive statistics, t-tests, chi-square tests, trend analysis, and NPV and BCR analyses. The results showed that Eucalyptus woodlot plantations have increased in area over time. The profitability analysis indicated that the Eucalyptus investment generates a significantly higher NPV of 193,978.66 ETB/ha and a BCR of 4.69, whereas crop production yields an NPV of 162,699.13 ETB/ha and a BCR of 1.32. Across sensitivity analysis scenarios, Eucalyptus plantations consistently provide higher net returns and a more favorable return on investment. Despite its higher return, the Eucalyptus planting site must be identified and chosen in consultation with experts to minimize competition with food production.