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NDLA which explains the IRR close to the discount rate and the high
sensitivity of the project to small variations in price and cost.

Probabilistic Analysis of Economic Risk
The probabilistic analysis in scenario 1, obtained through the
Monte Carlo method, showed an 11.5 percent risk of the

project becoming unfeasible, considering variations of ±10
percent on the input variables.
The probability distribution indicates that relatively small
variations in input variables may shift the project from a viable
to an unfeasible condition.
This behavior reflects the limited economic robustness
hectare for scenario 1. For scenario 2, forest production would observed in scenario 1, in which the difference between timber
support a reduction of up to 59.50 cubic metre per hectare. revenue and production cost was minimal.
Considering the price of timber ex-factory, the cushion is only Under these conditions, forestry projects become more

USD 0.64 per cubic metre. exposed to market oscillations, cost escalation, and operational
In other words, if the price paid at the mill falls below inefficiencies.
USD 28.97 m⁻³ (the limit), the forest producer would operate Productive forest sites tend to reduce economic risk because
at a loss. For scenario 2, the producer would support a price higher yields dilute operational costs per unit of wood produced.
reduction of up to USD 5.39. This interpretation agrees with the present study, in which
The low attractiveness of the project may be related to the project maintained economic viability under the evaluated
the low price paid for timber at the mill and the transportation productivity conditions, but showed limited tolerance to adverse

distance adopted. The timber sales price is the variable which economic variations.
most influences the economic results of forestry projects.
Forestry projects may have a positive NPV, but remain Correlation And Sensitivity Analysis
sensitive to timber prices, which reduces economic robustness. The correlation coefficients that most negatively influenced
The difference of only USD 0.50 m⁻³ between revenue and the output variable (NPV) were the interest rate, transportation
cost indicates vulnerability to small market variations. distance, and manual wood loading cost, with coefficients of
This limited economic margin results from the cost structure -0.70, -0.65, and -0.16, respectively.
of the system, in which harvesting and transportation concentrate On the positive side, the only variable which contributed
most production expenses. to NPV performance was productivity in motor-manual forest

Motor-manual harvesting operations reduce efficiency and cutting activity, with a coefficient of 0.18.
limit economies of scale, increasing operational costs and In this case, a 10 percent increase in operator productivity
reducing profit margins. would imply a 1.8 percent increase in NPV.
Transportation costs also increase with distance and The sensitivity analysis demonstrated that interest rate,
can become the dominant cost component, especially under transportation distance, and manual loading cost were the
moderate productivity and low timber prices. variables with the greatest negative influence on NPV.
As a result, most revenue is absorbed by operational costs, Increasing interest rates reduce the attractiveness of forestry