Investment Uncertainty Analysis in Eucalyptus Bole Biomass Production in Brazil

Danilo Simões,Ailton Dinardi,Magali Silva

doi:10.3390/f9070384

Danilo Simões, Ailton Dinardi + Show 1 more

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https://doi.org/10.3390/f9070384

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Abstract

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 Sao Paulo, Brazil, using 5 treatments with spacings of 3 × 2 m; 3 × 1 m; 1.5 × 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.

Highlights

The Brazilian forestry sector, in the production of forest biomass used as raw material for the generation of energy, has presented important advances that have contributed to forest improvement, with a view to the process of converting wood to energy, based on the triple bottom line
To determine the rate of financing used to decapitalize the negative cash flows, we considered data from the economic-financial time series referring to the rate of the Special Clearance and Escrow System (SELIC) observed between
The productivity of commercial reforestation with eucalyptus, for the biomass production of the main bole, is premised on the spatial distribution of the trees, which determines the volume of wood harvested and the cost of cultivation

Summary

Introduction

The Brazilian forestry sector, in the production of forest biomass used as raw material for the generation of energy, has presented important advances that have contributed to forest improvement, with a view to the process of converting wood to energy, based on the triple bottom line.In Brazil, a potential alternative energy source is biomass from forests, from the genusEucalyptus, which has several selected clonal stands for energy production [1]. The Brazilian forestry sector, in the production of forest biomass used as raw material for the generation of energy, has presented important advances that have contributed to forest improvement, with a view to the process of converting wood to energy, based on the triple bottom line. In Brazil, a potential alternative energy source is biomass from forests, from the genus. The need for a biomass that is fast growing, relatively low cost, and highly productive has been the main motivation to explore the potential for bioenergy production from eucalyptus [2]. If the bioenergy supply is not viewed from the perspective of the production process, some judgments about their economic value may be inaccurate [3]. The understanding of forest economics requires applied studies focusing on different regions and species [7]

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