Forest plantation profitability model
Model description: This model was developed in 1999 for an FAO Technical Assistance Project in Lithuania. The model is contained in one Excel Workbook, comprising five separate spreadsheets (planting models, price-size curves, yield models, lookup tables and results). The model contains data collected in Lithuania in 1999, but it would be easy to replace this with data from another country. The model is suitable for any country with long-rotation forest plantations.
The planting models spreadsheet contains all of the plantation establishment and management cost data. This information is stored in tables (one for each planting model), where cost data can be entered as totals, or broken down into labour, materials and vehicle, machinery and equipment (VME) costs. Overheads are input as a percentage increase in costs, which can be input here or as a variable that will be applied to all costs (input on the results spreadsheet). The year in which each operation takes place (or the first and last years in the case of repeated operations) must also be entered into every line of each model. The letters "T" and "F" can be used to signify the years of first thinning and felling respectively. The model has the capacity to handle up to 20 planting cost models.
The yield models spreadsheet can handle up to 55 different yield models. Each model follows a standard format that most foresters will recognise, showing the volume and size (dbh) of thinnings and main crop at each of a number of crop ages. The convention in Lithuania is to refer to each yield model by top height at a specified age (e.g. pine-100-15 = pine that is 15 metres high at 100 years), but the model also calculates and displays mean annual increment (MAI).
The price-size curves spreadsheet contains the price data used in the model. For each species, this is expressed as a series of stumpage prices for each dbh. The model has the capacity to handle up to 20 price-size curves.
The lookup tables spreadsheet takes the titles given to each of the planting models, yield models and price-size curves and formats these so that they can be used in the drop-down menus on the results spreadsheet. It also contains a few other cells that assist with the calculations. There is no need for the user to refer to this spreadsheet.
The results spreadsheet is the interface for the model, where the user specifies parameters and gets the results. General parameters, such as: the stocking rate; rotation age; and discount rate, are input into the boxes on the left-hand side. The planting model, yield model and price-size curve that will be used are selected using the drop-down menus on the right-hand side. Results are shown underneath these menus and include measures such as: total discounted revenue and expenditure; NPV; annualised expenditure, revenue and NPV; and the land expectation value. All of these results are presented as amounts per hectare for a single combination of costs, yield and prices. The IRR can be calculated using the solver function in the spreadsheet, by setting the target cell (NPV in cell I24) to zero and telling it to vary the discount rate (in cell E20). Similarly, the economically optimal rotation age can be found by telling the solver to maximise NPV by varying the rotation age (in cell I16).