Financial and risk analysis of African mahogany plantations in Brazil

ABSTRACT Wood demand is increasing in quality and quantity, and economic studies are fundamental to analyze the feasibility of forest projects. These researches are in line with management and silvicultural studies, highlighting growth and yield modeling. This paper proposes an economic evaluation of implementation of African mahogany stands in Brazil under different perspectives of forest management. Data are from plantations ranging from 1.1 to 15 years old in different Brazilian regions. Financial analysis was undertaken using Net Present Value (NPV), Internal Rate of Return (IRR) and Equal Annual Equivalent (EAE) for a 20-year period considering three thinning management regimes (A - unthinned, B - one thinning at age 10 years remaining 150 trees ha-1 and C - two thinnings, first at age 8 remaining 150 trees ha-1 and second at age 15 years remaining 75 trees ha-1) considering an initial density of 278 trees ha-1. A Monte Carlo simulation was performed considering six risk variables. Results showed that the discount rate is the variable that most influences the viability of the project. All site indexes in all management regimes lead to a feasible financial return, with NPV values ranging from 25,053 to 125,780 Brazilian reais per hectare, being regimes B and C the best ones. The probability for an unfeasible investment is almost zero, highlighting African mahogany as a great forest investment opportunity, providing high interest rates values (14% to 25%), superior to most available market rates of return.

Use data from permanent sampling points in growth and yield modeling

This study was carried to evaluate the efficiency of the Bitterlich method in growth and yield modeling of the even-aged Eucalyptus stands. 25 plots were setup in Eucalyptus grandis cropped under a high bole system in the Central Western Region of Minas Gerais, Brazil. The sampling points were setup in the center of each plot. The data of four annual mesurements were colleted and used to adjust the three model types using the age, the site index and the basal area as independent variables. The growths models were fitted for volume and mass of trees. The efficiency of the Bitterlich method was confirmed for generating the data for growth and yield modeling.

A simple production function model for variable density growth and yield modeling

This paper proposes a logarithmic–reciprocal yield function that improves upon the function proposed by Nautiyal and Couto (J. C. Nautiyal and L. Couto. 1982. Can. J. For. Res. 12: 452–458) by allowing forest crops starting with different stocking levels to eventually approach the same volume and peaking of the current annual increment (CAI) at different ages of the stands. The function is then used to fit yield data generated from Smalley and Bailey's study (Smalley, G. W., and R. L. Bailey. 1974. U.S. For. Serv. Res. Pap. SO–96) that shows wobbles in CAI and changes in yield as a result of changes in planting density. The basic model is then expanded by incorporating site index to account for local differences in productivity. Finally, compatible growth functions that can be estimated with log differences in yield instead of instantaneous growth are also derived.