Silvicultural regimes and financial return for pinus taeda within two forestry zones in Uruguay

Abstract

Forest industry in Uruguay, namely sawmilling, pulping, MDF and plywood manufacturing processes are rapidly expanding. Pinus taeda has been grown for both pulpwood and sawlog production. Sawmill products include several quality classes, from scaffolding boards and pallets to clearwood lumber. Higher grade obtention involves increased silvicultural complexity, investment rates and rotation lengths. Financial risk levels may also be altered. Three silvicultural systems were devised for loblolly pine grown in two forestry zones, West Litoral (lat. 32º40’–33ºS; long. 57–58ºW) y el Noreste (lat. 31º–32º20’S; long. 55–55º30’W). Proposed systems differed in pruning, thinning and rotation lengths and were accordingly termed extensive, for pulpwood or particleboard logs, intermediate and intensive for high-quality sawlog production. Growth and yield were simulated for each system; volumes were graded in 5 small-end diameter and total pruned length. Financial assessment criteria were Expected Annual Forest Rent (AFR) and Expected Internal Return Rate (IRR) values. Probability of negative returns was computed using Montecarlo simulation; risk productive profiles were determined for each zone. On West Litoral sites, system I yields 196m³ ha^-1, 61% pulpwood or MDF logs, 37% small sawlogs; in spite of its economic feasibilty, negative return likelihood is 70%. System II yield was low (154m³ ha^-1, 24 yr. rotation) and probability of negative returns was high. System III yields 219m3 ha1 on a 24 yr. rotation; 60% is harvested as pruned sawlogs. Average IRR is 6.4% and the likelihood of negative returns is 5%. On Northeast sites, all systems were technically and financially feasible. System II was the most efficient, with 309 m³ ha^-1 on a 24-yr. rotation; only 9% harvested as small logs. System II seems financially preferable to system III, possibly because of earlier income and lower treatment costs. Intensive feasible regimes are less likely to result in negative returns than extensive systems. West Litoral sites show poor aptitude for high quality sawlog production. Northeast sites are more versatile, as both MDF log (system I) and sawlog (systems II and III) production is feasible.The withdrawal of plantation subsidies as incentive to forestry have not altered simulated regime viability, except for the extensive system in West Litoral. Simulation techniques used may be applied to making portfolio allocation decisions suited to forestry investor’s risk profile. As regionally-based industry develops, disadvantages of distance to markets will decrease and intensive silvicultural systems should become comparatively more competitive.