Financial variability of the second cutting of forest management in Tapajós National Forest, Brazil

Maisa Isabela Rodrigues, Álvaro Nogueira de Souza, Lucas Mazzei, José Natalino Macedo Silva, Maísa Santos Joaquim, Reginaldo Sérgio Pereira, Leonardo Job Biali, Daigard Ricardo Ortega Rodriguez and Ilvan Medeiros Lustosa Junior

Forest Policy and Economics, 2022, vol. 136, issue C

Abstract: Timber production in sustainable forest management must be carried out in periodic cycles, respecting the forest's resilience. However, logging is based on old-growth forests, and little is known about logging beyond the first cutting cycle. The study investigated the financial feasibility of the second cutting cycle carried out in the experimental area of Tapajós National Forest, Pará, Brazil. We use deterministic methods to assess financial viability (Net Present Value, Annualized Net Present Value and Average Production Cost) and Monte Carlo simulation for estimate the probability of Net Present Value occurrence. The second cutting cycle was considered a financially unfeasible investment. Forest management would have achieved financial viability if it had the maximum productivity allowed by law. The low productivity of the area, resulting from hollow trees, contributed to the unfeasibility of the investment. The low market value was a consequence of the high proportion of species with low commercial value and smaller size of managed trees. The period of 35 years between the cutting operations was enough for the recovery of the forest volume in the study area, but not for the financially viability of the forest management. Cutting cycles with a longer time interval and less cutting intensity are strategies that will allow the establishment of species with greater commercial value and dimensions adequate to market requirements, fundamental factors for the profitability of forest management in successive cycles.

Keywords: Cutting cycles; Forest economy; Public forests; Forest management; Forest policy (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:forpol:v:136:y:2022:i:c:s1389934122000065

DOI: 10.1016/j.forpol.2022.102694

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