Economic viability of cerrado vegetation management under conditions of risk

Abstract

Cerrado vegetation is Brazil's second largest biome, comprising about 388 municipalities in Minas Gerais state alone and serving as an important source of natural resources. A large share of the wood charcoal produced in Minas Gerais is sourced from Cerrado vegetation. The objective of this work is to assess the economic viability of Cerrado vegetation management for wood charcoal production, under conditions of risk. The study site is a fragment of Cerrado subjected to fi ve levels of intervention as to basal area removal. For risk analysis, the Monte Carlo method was applied, using charcoal price, interest rate and land value as input variables, and using Net Present Value as output variable over an infi nite planning horizon. It was concluded that introducing risk in the economic analysis of the various Cerrado management regimes helped provide additional information to that obtained by deterministic analysis, improving understanding and ensuring safety in decision-making about the economic viability of such regimes. For all treatments, the probability of VPL being negative increases with increasing cutting cycle lengths. For all treatments, the optimal cutting cycle is ten years. Treatments where a larger volume of wood was removed proved less prone to risks of economic inviability since they secure more revenue than treatments where less wood was removed.

Economic Feasibility Analysis of a Forest-Livestock Integration System in Alta Floresta, Mato Grosso State, Brazil

“…According to Hacura et al (2001), the project is considered low risk when the probability of NPV being negative is less than 20%. Thus, the results found (14.4%) in this study indicate that, under these conditions, the Livestock-Forest integration system is considered low risk, althogout, according to Silva et al (2011), risk is a subjective variable and each manager has an aversion measure for it.…”

Análise Econômica Da Rotação Florestal De Povoamentos De Eucalipto Utilizando a Simulação De Monte Carlo

“…Já no sítio III, observa-se que o risco é o mesmo quando o corte da floresta é realizado aos 10 ou 11 anos, optando-se então pelo corte na idade de menor prejuízo. Segundo Silva et al (2011), a análise de risco propicia a obtenção de informações adicionais às obtidas pela análise determinística, facilitando a compreensão e aumentando a segurança para a tomada de decisão em relação à viabilidade econômica de investimentos.…”