Economic Analysis of the Forest Promotion, Forest-Saving Program, Installed in the Southern Half of Rio Grande do Sul State, Brazil

This study aimed to analyze economically the forest promotion, forest-saving program installed in the southern half of Rio do Grande do Sul State, Brazil, as an income alternative and potential supplier of raw material in the forest production segment. Cost data were calculated for the total of 269 projects per hectare and divided into Inputs and Services. The revenues were derived from the sale of standing timber at the end of the forest production cycle, not including harvesting costs. For economic analysis, criteria from Net Present Value (NPV), Benefit Cost Ratio (B/C), Internal Rate of Return (IRR), and Equivalent Annual Value (EAV) were used. The interest rate used was 7.0% per year according to the promotion program. The project presents at seven years a NPV of $542.90 and an IRR of 16.0%, showing to be feasible and attractive. The costs and revenues from the year seven planting were analyzed and with addenda at years 8, 9, and 10, demonstrated that greater project profitability gains are achieved between years 8 and 9 with an increase of $463.18 in relation to year 8. This represents a profitability of 49.0% which had an increase of $229.61 when compared to year 7. The sensitivity analysis demonstrated the inverse relationship trend that exists between the NPV and the interest rate.

The project’s return capacity from the seventh year is precisely referenced by the freezing of the debt, which did not accrue an interest rate adjustment, as well as the price per cubic meter of timber, which remains readjusting as zero bases.