Risk Analysis of the Economic Benefits of Ochroma pyramidale: A Case Study of Forest Planting in Brazil

Abstract

: The forest investment projects, analyzed through the application of simulation techniques, allow measuring more accurately the benefits or losses, considering the systemic uncertainties related to forest plantation. In this perspective, the objective of this study was to identify the relative importance of sources of uncertainties in determining the net present value (NPV) of planting of Ochroma pyramidale on a forested property located in the state of São Paulo, Brazil. Thus, it assigns probability distributions to the parameters with uncertainties and applies the Monte Carlo technique to obtain the stochastic behavior of the NPV, of the modified internal rate of return (MIRR) and the profitability index (PI). The probabilistic results of the quantitative methods analyzed allowed us to conclude that for the planting O. pyramidale , with 5-year cutting age, indicated economic profitability. In addition, there is a probability that 84.6% of the project will add economic value to the invested capital.