Forest management decision making based on a real options approach: An application to a case in northeastern Argentina

Autores
Broz, Diego Ricardo; Milanesi, Gastón; Rossit, Daniel Alejandro; Rossit, Diego Gabriel; Tohmé, Fernando Abel
Año de publicación
2018
Idioma
inglés
Tipo de recurso
artículo
Estado
versión publicada
Descripción
Fil: Broz, Diego Ricardo. Universidad Nacional de Misiones. Facultad de Ciencias Forestales; Argentina.
Fil: Broz, Diego Ricardo. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina.
Fil: Milanesi, Gastón. Universidad Nacional del Sur. Departamento de Ciencias de la Administración; Argentina.
Fil: Rossit, Daniel Alejandro. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico. Instituto de Matemática (Bahía Blanca); Argentina.
Fil: Rossit, Daniel Alejandro. Universidad Nacional del Sur. Departamento de Matemática. Instituto de Matemática (Bahía Blanca); Argentina.
Fil: Rossit, Diego Gabriel. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico (Bahía Blanca). Instituto de Investigaciones Económicas y Sociales del Sur; Argentina.
Fil: Rossit, Diego Gabriel. Universidad Nacional del Sur. Departamento de Economía. Instituto de Investigaciones Económicas y Sociales del Sur; Argentina.
Fil: Tohmé, Fernando Abel. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico. Instituto de Matemática (Bahía Blanca); Argentina.
Fil: Tohmé, Fernando Abel. Universidad Nacional del Sur. Departamento de Matemática. Instituto de Matemática (Bahía Blanca); Argentina.
Fil: Tohmé, Fernando Abel. Universidad Nacional del Sur. Departamento de Economía; Argentina.
The Net Present Value (NPV) approach is widely applied to assess forest investments, but this method has serious shortcomings, which we propose to overcome by switching to the assessment through the Real Options Approach (ROA). The model in this paper starts with the simulation of the forest´s growth, combined with the projection of the products´ prices and valuing the assets using a binomial model. We include an option of postponement, determining the optimal period of felling. We find that ROA is more robust than the NPV approach because it relaxes the assumption of constancy of both the prices and the discount rate, allowing the determination of the optimal time of felling based on the growth rate of either the forest or the prices of its products. Contrary to the traditional NPV approach, the results obtained with ROA exhibit longer harvest turns and consequently higher profits. The key variable in the ROA, the Real Option Value (ROV) can be shown to be less (albeit moderately) sensitive to decreases of the discount rate than NPV. Moreover, ROV is moderately sensitive to decreases in the price of logs and is negligibly affected by rises in the costs of harvesting, loading and transporting rolls.
Materia
Real options
Binomial model
Binomial tree
Nivel de accesibilidad
acceso abierto
Condiciones de uso
Atribución-NoComercial-CompartirIgual 4.0 Internacional
Repositorio
Repositorio Institucional Digital de la Universidad Nacional de Misiones (UNaM)
Institución
Universidad Nacional de Misiones
OAI Identificador
oai:rid.unam.edu.ar:20.500.12219/4987
Acceder
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repository_id_str
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spelling Forest management decision making based on a real options approach: An application to a case in northeastern ArgentinaBroz, Diego RicardoMilanesi, GastónRossit, Daniel AlejandroRossit, Diego GabrielTohmé, Fernando AbelReal optionsBinomial modelBinomial treeFil: Broz, Diego Ricardo. Universidad Nacional de Misiones. Facultad de Ciencias Forestales; Argentina.Fil: Broz, Diego Ricardo. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina.Fil: Milanesi, Gastón. Universidad Nacional del Sur. Departamento de Ciencias de la Administración; Argentina.Fil: Rossit, Daniel Alejandro. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico. Instituto de Matemática (Bahía Blanca); Argentina.Fil: Rossit, Daniel Alejandro. Universidad Nacional del Sur. Departamento de Matemática. Instituto de Matemática (Bahía Blanca); Argentina.Fil: Rossit, Diego Gabriel. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico (Bahía Blanca). Instituto de Investigaciones Económicas y Sociales del Sur; Argentina.Fil: Rossit, Diego Gabriel. Universidad Nacional del Sur. Departamento de Economía. Instituto de Investigaciones Económicas y Sociales del Sur; Argentina.Fil: Tohmé, Fernando Abel. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico. Instituto de Matemática (Bahía Blanca); Argentina.Fil: Tohmé, Fernando Abel. Universidad Nacional del Sur. Departamento de Matemática. Instituto de Matemática (Bahía Blanca); Argentina.Fil: Tohmé, Fernando Abel. Universidad Nacional del Sur. Departamento de Economía; Argentina.The Net Present Value (NPV) approach is widely applied to assess forest investments, but this method has serious shortcomings, which we propose to overcome by switching to the assessment through the Real Options Approach (ROA). The model in this paper starts with the simulation of the forest´s growth, combined with the projection of the products´ prices and valuing the assets using a binomial model. We include an option of postponement, determining the optimal period of felling. We find that ROA is more robust than the NPV approach because it relaxes the assumption of constancy of both the prices and the discount rate, allowing the determination of the optimal time of felling based on the growth rate of either the forest or the prices of its products. Contrary to the traditional NPV approach, the results obtained with ROA exhibit longer harvest turns and consequently higher profits. The key variable in the ROA, the Real Option Value (ROV) can be shown to be less (albeit moderately) sensitive to decreases of the discount rate than NPV. Moreover, ROV is moderately sensitive to decreases in the price of logs and is negligibly affected by rises in the costs of harvesting, loading and transporting rolls.De Gruyter Open Ltd.2018-04-25info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionhttp://purl.org/coar/resource_type/c_6501info:ar-repo/semantics/articuloapplication/pdfapplication/pdf452.1 KBhttps://hdl.handle.net/20.500.12219/4987enginfo:eu-repo/semantics/altIdentifier/urn/https://mi.emu.ee/et/teadusinfo/metsanduslikud-uurimused/contents/2017/vol-67/info:eu-repo/semantics/openAccessAtribución-NoComercial-CompartirIgual 4.0 Internacionalhttp://creativecommons.org/licenses/by-nc-sa/4.0/reponame:Repositorio Institucional Digital de la Universidad Nacional de Misiones (UNaM)instname:Universidad Nacional de Misiones2025-09-04T11:43:35Zoai:rid.unam.edu.ar:20.500.12219/4987instacron:UNAMInstitucionalhttps://rid.unam.edu.ar/Universidad públicahttps://www.unam.edu.ar/https://rid.unam.edu.ar/oai/rsnrdArgentinaopendoar:2025-09-04 11:43:35.903Repositorio Institucional Digital de la Universidad Nacional de Misiones (UNaM) - Universidad Nacional de Misionesfalse
dc.title.none.fl_str_mv Forest management decision making based on a real options approach: An application to a case in northeastern Argentina
title Forest management decision making based on a real options approach: An application to a case in northeastern Argentina
spellingShingle Forest management decision making based on a real options approach: An application to a case in northeastern Argentina
Broz, Diego Ricardo
Real options
Binomial model
Binomial tree
title_short Forest management decision making based on a real options approach: An application to a case in northeastern Argentina
title_full Forest management decision making based on a real options approach: An application to a case in northeastern Argentina
title_fullStr Forest management decision making based on a real options approach: An application to a case in northeastern Argentina
title_full_unstemmed Forest management decision making based on a real options approach: An application to a case in northeastern Argentina
title_sort Forest management decision making based on a real options approach: An application to a case in northeastern Argentina
dc.creator.none.fl_str_mv Broz, Diego Ricardo
Milanesi, Gastón
Rossit, Daniel Alejandro
Rossit, Diego Gabriel
Tohmé, Fernando Abel
author Broz, Diego Ricardo
author_facet Broz, Diego Ricardo
Milanesi, Gastón
Rossit, Daniel Alejandro
Rossit, Diego Gabriel
Tohmé, Fernando Abel
author_role author
author2 Milanesi, Gastón
Rossit, Daniel Alejandro
Rossit, Diego Gabriel
Tohmé, Fernando Abel
author2_role author
author
author
author
dc.subject.none.fl_str_mv Real options
Binomial model
Binomial tree
topic Real options
Binomial model
Binomial tree
dc.description.none.fl_txt_mv Fil: Broz, Diego Ricardo. Universidad Nacional de Misiones. Facultad de Ciencias Forestales; Argentina.
Fil: Broz, Diego Ricardo. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina.
Fil: Milanesi, Gastón. Universidad Nacional del Sur. Departamento de Ciencias de la Administración; Argentina.
Fil: Rossit, Daniel Alejandro. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico. Instituto de Matemática (Bahía Blanca); Argentina.
Fil: Rossit, Daniel Alejandro. Universidad Nacional del Sur. Departamento de Matemática. Instituto de Matemática (Bahía Blanca); Argentina.
Fil: Rossit, Diego Gabriel. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico (Bahía Blanca). Instituto de Investigaciones Económicas y Sociales del Sur; Argentina.
Fil: Rossit, Diego Gabriel. Universidad Nacional del Sur. Departamento de Economía. Instituto de Investigaciones Económicas y Sociales del Sur; Argentina.
Fil: Tohmé, Fernando Abel. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico. Instituto de Matemática (Bahía Blanca); Argentina.
Fil: Tohmé, Fernando Abel. Universidad Nacional del Sur. Departamento de Matemática. Instituto de Matemática (Bahía Blanca); Argentina.
Fil: Tohmé, Fernando Abel. Universidad Nacional del Sur. Departamento de Economía; Argentina.
The Net Present Value (NPV) approach is widely applied to assess forest investments, but this method has serious shortcomings, which we propose to overcome by switching to the assessment through the Real Options Approach (ROA). The model in this paper starts with the simulation of the forest´s growth, combined with the projection of the products´ prices and valuing the assets using a binomial model. We include an option of postponement, determining the optimal period of felling. We find that ROA is more robust than the NPV approach because it relaxes the assumption of constancy of both the prices and the discount rate, allowing the determination of the optimal time of felling based on the growth rate of either the forest or the prices of its products. Contrary to the traditional NPV approach, the results obtained with ROA exhibit longer harvest turns and consequently higher profits. The key variable in the ROA, the Real Option Value (ROV) can be shown to be less (albeit moderately) sensitive to decreases of the discount rate than NPV. Moreover, ROV is moderately sensitive to decreases in the price of logs and is negligibly affected by rises in the costs of harvesting, loading and transporting rolls.
description Fil: Broz, Diego Ricardo. Universidad Nacional de Misiones. Facultad de Ciencias Forestales; Argentina.
publishDate 2018
dc.date.none.fl_str_mv 2018-04-25
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
http://purl.org/coar/resource_type/c_6501
info:ar-repo/semantics/articulo
format article
status_str publishedVersion
dc.identifier.none.fl_str_mv https://hdl.handle.net/20.500.12219/4987
url https://hdl.handle.net/20.500.12219/4987
dc.language.none.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv info:eu-repo/semantics/altIdentifier/urn/https://mi.emu.ee/et/teadusinfo/metsanduslikud-uurimused/contents/2017/vol-67/
dc.rights.none.fl_str_mv info:eu-repo/semantics/openAccess
Atribución-NoComercial-CompartirIgual 4.0 Internacional
http://creativecommons.org/licenses/by-nc-sa/4.0/
eu_rights_str_mv openAccess
rights_invalid_str_mv Atribución-NoComercial-CompartirIgual 4.0 Internacional
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dc.format.none.fl_str_mv application/pdf
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452.1 KB
dc.publisher.none.fl_str_mv De Gruyter Open Ltd.
publisher.none.fl_str_mv De Gruyter Open Ltd.
dc.source.none.fl_str_mv reponame:Repositorio Institucional Digital de la Universidad Nacional de Misiones (UNaM)
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