Optimizing forest sector performance based on life cycle cost analysis and real options

This study assessed the life cycle costs of eucalyptus production in a Brazilian forestry company. The analysis combined traditional Economic Feasibility Analysis with Monte Carlo Simulation and Real Options to account for uncertainty. Results confirmed the project's economic viability, with the Reform/Coppice or Reform/Conduction scenarios offering the highest returns. Wood price and production levels were the most influential factors. The most cost-effective approach involved chemical fertilization and manual ant control. The study highlights the value of integrating probabilistic methods into cost analysis, enhancing decision-making and identifying opportunities to reduce costs in the eucalyptus production cycle.