Quantitative Analysis of Uncertainty in Financial Risk Assessment of Road Transportation of Wood in Uruguay

Simões, Danilo; Mosquera, Gustavo Andrés Daniluk; Batistela, Gislaine Cristina; Passos, José Raimundo de Souza; Fenner, Paulo Torres

doi:10.3390/f7070130

Cited by 13 publications

(11 citation statements)

References 32 publications

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“…The deterministic variables were bole biomass (dry ton/ha), deployment costs (USD/ha), cultural treatment costs for 1st year (USD/ha), cultural treatment costs for 2nd year (USD/ha), administration costs (USD/ha), and land remuneration (USD/ha). Due to lack of information for these variables, we assumed the distribution followed a symmetrical triangular distribution [45][46][47][48]. The probability distribution is the building block for risk models that calculates the probability distribution of output random variables based on the probability distribution of input random variables [49].…”

Section: Risk Analysismentioning

confidence: 99%

Investment Uncertainty Analysis in Eucalyptus Bole Biomass Production in Brazil

Simões

Dinardi

Silva

2018

Forests

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Forestry investment projects for the biomass production of the eucalyptus bole can be characterized by uncertain environments, which result in economic risk to the forest producer, however that can be measured by applying probabilistic techniques. This was our motivation and justification for analyzing the economic-financial viability of different silvicultural practices for eucalyptus bole biomass production under conditions of uncertainties, running Monte Carlo method for risk management. The experiment was carried out in the state of São Paulo, Brazil, using 5 treatments with spacings of 3 m × 2 m; 3 m × 1 m; 1.5 m × 2 m; 3 m × 0.5 m; and 1.5 m × 1.0 m, i.e., different spacings between planting lines and plants. These treatments were characterized as investment projects. To develop stochastic models, we relied on technical-economic deterministic variables. We evaluated the investment projects based on the cash flows under conditions of uncertainty, discounted at the attractiveness rate calculated by capital asset pricing model. With the results of these economic flows, the net present value, the modified internal rate of return and the profitability index values were estimated, commonly used in the analysis of investments in projects. The results showed that based on economic metrics, the three-year rotation cycle for forest stands for biomass production of the main bole of eucalyptus, with a spacing of three meters between rows and two meters between plants, had an 83% probability of economic success. The sensitivity analysis showed that the bole biomass of eucalyptus is the most important variable for determining the economic-financial feasibility of the investment project.

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Section: Risk Analysismentioning

confidence: 99%

Investment Uncertainty Analysis in Eucalyptus Bole Biomass Production in Brazil

Simões

Dinardi

Silva

2018

Forests

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“…The software uses a stochastic Monte Carlo simulation procedure for conducting sensitivity and risk analyses where input variables vary simultaneously to produce the output variables. We simulated the developed model 1000 times and used a triangular probability distribution function for input variables (Simoes et al, 2016).…”

Section: Financial Risk and Sensitivity Analysesmentioning

confidence: 99%

Economics of Southern Pines With and Without Payments for Environmental Amenities in the US South

Paudel

Dwivedi

2021

Front. For. Glob. Change

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During the early 1900s, nearly 37 million hectares of land in the Southern United States were under longleaf pine (Pinus palustris) relative to the current area of 1.6 million hectares. This study compares the economics of southern pines (longleaf, loblolly (Pinus taeda), and slash (Pinus elliottii)) to facilitate the decision making of family forest landowners and design suitable financial incentives for increasing the area under longleaf pine in the region. We simulated six growth and yield scenarios for selected southern pines over three site indices in the Lower Coastal Plain of South Georgia. We estimated land expectation values (LEVs) of each scenario for the three cases, i.e., payment for forest products, payment for forest products and net carbon storage, and payment for forest products, net carbon storage, and net water yield. Our findings show that pine straw income significantly increases the LEV of longleaf pine. The financial risk of growing longleaf pine is lower than that of other southern pines. Existing financial support through various governmental incentives or additional monetary support for ecosystem services provided by longleaf pine ecosystems is needed to increase the area under longleaf pine in the Southern United States, in general, and in South Georgia, in particular. However, a need exists to reevaluate the conservation values provided by longleaf plantations considering expected shorter rotation ages due to the income provided by pine straw markets in Southern United States.

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“…The simulations were done using the @RISK 7.5 software (Palisade, 2017) and the input variables followed a symmetrical triangular distribution, with central peak (mode) and endpoints (minimum and maximum). The triangular distribution is easy to understand and commonly used in uncertainty analysis when there is no credible information about the probability distribution of the weighted variables in the stochastic model (Simões et al, 2016).…”

Section: Capital Budgeting Calculationmentioning

confidence: 99%

Financial and risk analysis of African mahogany plantations in Brazil

et al. 2018

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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 . 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.Index terms: Forest investment; Monte Carlo simulation; financial risk. RESUMOO crescimento da demanda por madeira se dá em qualidade e quantidade, sendo os estudos econômicos fundamentais na análise da viabilidade de projetos florestais. Tais estudos estão alinhados aos estudos de manejo e silvicultura, destacando a modelagem do crescimento e produção. Este trabalho propõe a avaliação econômica da implantação do mogno africano no Brasil sob diferentes perspectivas de manejo florestal. Os dados são provenientes de plantios com idades variando de 1,1 a 15 anos localizados em diferentes regiões do Brasil. Uma análise financeira foi realizada utilizando o Valor Presente Líquido (VPL), Taxa Interna de Retorno (TIR) e Valor Anual Equivalente (VAE) para uma rotação de 20 anos de idade considerando diferentes regimes de desbaste (A -não desbastado, B -um desbaste aos 10 anos de idade com 150 árvores por hectare remanescentes e C -dois desbastes, primeiro na idade de 8 anos remanescendo 150 árvores por hectare e segundo aos 15 anos com 75 árvores por hectare remanescentes) considerando uma densidade inicial de 278 árvores por hectare. Uma simulação de Monte Carlo foi realizada levando em consideração diferentes variáveis de risco. Os resultados mostraram que a taxa de desconto foi a variável que mais influenciou a viabilidade do investimento. Todas as classes de sítio nos diferentes regimes de manejo apresentaram valores de VPL positivos, variando de 25.053 a 125.780 reais por hectare, sendo os regimes B e C os melhores. A simulação de Monte Carlo mostrou que a probab...

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Quantitative Analysis of Uncertainty in Financial Risk Assessment of Road Transportation of Wood in Uruguay

Cited by 13 publications

References 32 publications

Investment Uncertainty Analysis in Eucalyptus Bole Biomass Production in Brazil

Investment Uncertainty Analysis in Eucalyptus Bole Biomass Production in Brazil

Economics of Southern Pines With and Without Payments for Environmental Amenities in the US South

Financial and risk analysis of African mahogany plantations in Brazil

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