ABSTRACT

Economic analyses of forest investment projects through the application of the Real Options Approach (ROA) allow the weighting of market uncertainties, furthermore, it attributes value to these projects by incorporating managerial flexibilities. Thus, we evaluated whether investment projects in Eucalyptus planted forests are economically viable, through the pricing of multiplicative binomial options in discrete time. Investment projects in Eucalyptus planted forests located in the State of São Paulo in Brazil were evaluated. Therefore, we considered the possibility of the forest producer acquiring the land or leasing it, considering two silvicultural regimes, i.e., forest conduction and forest area reform. Consequently, cash flows were elaborated based on technical-economic coefficients for a projected horizon for 14 years as a result of clear-cutting of the forests. Dynamic binomial trees were built in order to incorporate managerial flexibilities. In analyzing the investment project based on land acquisition, economic viability was proven for both silvicultural regimes, with 100% probability of deferral after the second year of implementation, and 99% of abandonment in the seventh year, with an expanded net present value of USD 7,171,265 and USD 25,970,288, respectively. As for the investment project under land lease regime, the project proved to be economically unviable. The ROA applied to the forest investment projects, provided added value and allowed inferring that, under the conditions of the study, the investment projects for reforming and conduction Eucalyptus planted forests are viable from the acquisition of land.