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Uncertainty in Forest Net Present Value Estimations

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dc.contributor.author Holopainen, Markus
dc.contributor.author Mäkinen, Antti
dc.contributor.author Rasinmäki, Jussi
dc.contributor.author Hyytiäinen, Kari
dc.contributor.author Bayazidi, Saeed
dc.contributor.author Vastaranta, Mikko
dc.contributor.author Pietilä, Ilona
dc.date.accessioned 2011-01-14T15:14:03Z
dc.date.available 2011-01-14T15:14:03Z
dc.date.issued 2010 en_US
dc.identifier.uri https://hdl.handle.net/10535/6788
dc.description.abstract "Uncertainty related to inventory data, growth models and timber price fluctuation was investigated in the assessment of forest property net present value (NPV). The degree of uncertainty associated with inventory data was obtained from previous area-based airborne laser scanning (ALS) inventory studies. The study was performed, applying the Monte Carlo simulation, using stand-level growth and yield projection models and three alternative rates of interest (3, 4 and 5%). Timber price fluctuation was portrayed with geometric mean-reverting (GMR) price models. The analysis was conducted for four alternative forest properties having varying compartment structures: (A) a property having an even development class distribution, (B) sapling stands, (C) young thinning stands, and (D) mature stands. Simulations resulted in predicted yield value (predicted NPV) distributions at both stand and property levels. Our results showed that ALS inventory errors were the most prominent source of uncertainty, leading to a 5.1–7.5% relative deviation of property-level NPV when an interest rate of 3% was applied. Interestingly, ALS inventory led to significant biases at the property level, ranging from 8.9% to 14.1% (3% interest rate). ALS inventory-based bias was the most significant in mature stand properties. Errors related to the growth predictions led to a relative standard deviation in NPV, varying from 1.5% to 4.1%. Growth model-related uncertainty was most significant in sapling stand properties. Timber price fluctuation caused the relative standard deviations ranged from 3.4% to 6.4% (3% interest rate). The combined relative variation caused by inventory errors, growth model errors and timber price fluctuation varied, depending on the property type and applied rates of interest, from 6.4% to 12.6%. By applying the methodology described here, one may take into account the effects of various uncertainty factors in the prediction of forest yield value and to supply the output results with levels of confidence." en_US
dc.language English en_US
dc.subject uncertainty en_US
dc.subject forests en_US
dc.subject forest management en_US
dc.subject simulations en_US
dc.title Uncertainty in Forest Net Present Value Estimations en_US
dc.type Journal Article en_US
dc.type.published published en_US
dc.type.methodology Case Study en_US
dc.subject.sector Forestry en_US
dc.identifier.citationjournal Forests en_US
dc.identifier.citationvolume 1 en_US
dc.identifier.citationpages 177-193 en_US

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