Determinants of Financial Viability of Forest Concession in Brazilian Amazon

Abstract

This study aimed to assess the financial viability of forest concessions in the state of Pará, Brazil. Two Forest Management Units (FMUs) were analyzed: FMU-2, located in Saracá-Taquera National Forest, and FMU-3, located in Caxiuanã National Forest. Financial indicators were evaluated under different timber productivity scenarios (20 m3/ha and 25.8 m3/ha). At a logging intensity of 20 m3/ha, FMU-2 was not financially viable. However, both FMUs were financially viable at 25.8 m3/ha. Sensitivity analysis demonstrated that FMU-2 requires a logging intensity of over 22 m3/ha and a sawmill yield efficiency of at least 45%. The ideal cost for sawn wood would be USD 226.53/m3, with royalties of USD 16.00/m3. FMU-3 consistently demonstrated positive financial results, despite fluctuations in production costs. The financial viability of investing in forest concessions in state of Pará depends largely on forest productivity, sawmill yield, royalties, and sawn wood costs.