The study was designed to determine whether cultivation of willow (Salix sp.) energy plantations (hereinafter WEP) is economically efficient and to identify the main factors that influence development of such plantations in Lithuania. The economic efficiency of the cul- tivation of WEP was estimated based on cash flow analysis, discounted cash flow net present value and decomposition analysis methods. The survey of the willow plantation growers identified the motives, incentives, problems and intentions of local willow growers. The study revealed that cultivation of WEP was mostly hindered by economic factors, including low selling price of willow biomass for fuel and high cost of harvesting. Willow cultivation in Lithuania was least hindered by social and ecological factors. The results suggest that European Union (EU) subsidies are currently the main incentive to cultivate willow plantations. However, financial support alone did not guarantee the success of willow biomass harvesting and market access of the final biofuel production. The findings of this study provide information for decision makers on the opportunities and challenges of the development of willow plantations in Lithuania.

Keywords: Salix sp., short-rotation plantations, social and economic factors, economic incentives