Economics Calculator

Introduction

You can use this calculator to work out the Net Present Value (NPV) of a 1 ha stand of native trees managed using continuous cover harvesting with carbon and other income streams.

Users can load their own values and skip some of the steps if not relevant to their planting proposal. Alternatively, users can use default values for most fields by ticking the “Show default values” checkbox.

Note that costs/returns in the calculator should exclude GST. See the tip in the website footer for how to convert a GST inclusive cost to a GST exclusive cost.

About Net Present Value (NPV)

Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. It is used to analyse the profitability of a projected investment or project over time by calculating the current value of a future stream of payments.

NPV is calculated by estimating the timing and amount of future cash flows and picking a discount rate equal to the minimum acceptable rate of return. The discount rate may reflect your cost of capital or the returns available on alternative investments of comparable risk. If the NPV of a project or investment is positive, it means its rate of return will be above the discount rate.

Age & discount rate

Current age (years)

Discount rate (%)

Establishment costs

Show default values

Site preparation ($/ha)

Seedlings ($/ha)

Planting ($/ha)

Initial pest control ($/ha)

Other ($/ha)

Post-planting costs

Timing units: years from planting
Cost units: $/ha

Show default values

Item 1

1st release timing

1st release cost

Item 2

2nd release timing

2nd release cost

Item 3

3rd release timing

3rd release cost

Item 4

Other 1 timing

Other 1 cost

Item 5

Other 2 timing

Other 2 cost

Silviculture costs

Timing units: years from planting
Cost units: $/ha

Show default values

Item 1

Form prune 1 timing

Prune 1 cost

Item 2

Form prune 2 timing

Prune 2 cost

Item 3

Waste thin 1 timing

Waste thin 1 cost

Item 4

Waste thin 2 timing

Waste thin 2 cost

Other one-off costs

Any additional one-off costs such as fencing repairs, access maintenance, etc.

Item 1

Label

Timing (years from planting)

Cost ($/ha)

Item 2

Label

Timing (years from planting)

Cost ($/ha)

Item 3

Label

Timing (years from planting)

Cost ($/ha)

Item 4

Label

Timing (years from planting)

Cost ($/ha)

Item 5

Label

Timing (years from planting)

Cost ($/ha)

Annual costs

Costs that occur annually from the end of the first year after planting.

Show default values

Ongoing pest control ($/ha/year)

Rates ($/ha/year)

Other ($/ha/year)

Carbon

There are 3 options for carbon sequestration values:

Use values derived from the Tāne’s Tree Trust Carbon Calculator using 2500 stems/ha with 25% trees, 75% shrubs.
Use values from the MPI lookup table for indigenous forestry. Note: this table only covers the first 50 years. The calculation assumes 0 carbon sequestration occurs beyond age 50 years.
Enter your own carbon sequestration values.

Carbon sequestration

TTT values
MPI lookup table
Own values

Show default values

Carbon value ($/t CO2eq)

Annual sequestration

Years 1-10 (t/CO2/ha/yr)

Years 11-20 (t/CO2/ha/yr)

Years 21-30 (t/CO2/ha/yr)

Years 31-40 (t/CO2/ha/yr)

Years 41-50 (t/CO2/ha/yr)

Years 51-100 (t/CO2/ha/yr)

Years 101-200 (t/CO2/ha/yr)

Harvesting

Returns from harvesting are based on continuous cover forestry methods. These assume that a proportion of stems are selectively harvested at a specified age from planting, and at regular intervals thereafter.

Show default values

Age at 1st harvest (years from planting)

Period between harvests (years)

Log volume at each harvest (m3/ha)

Log price ($/m3)

Harvest cost ($/m3)

Transport cost ($/m3/km)

Transport distance (km)

Other income

Other income (understory crops, tourism, etc)

Income from sources other than timber and carbon, e.g. understory crops, recreation, tourism, environmental payments such as nutrient offsets or biodiversity credits, etc., converted into a regular payment with a starting year.

Placing a dollar value on many non-timber benefits and products, and the wider ecosystem services of a native forest will be highly site and landowner specific. Where there is an annual income from a forest benefit, e.g. a tourist lodge associated with the forest for paying guests, users can enter this in the calculator on a per hectare dollar value.

However, some positive outcomes (benefits) of projects (e.g., enhancement of a landscape, addition to biodiversity, water quality improvements, the value of reduced erosion) can be extremely difficult to put a dollar value on. For these benefits that are difficult to quantify in economic terms users have an option of entering their own estimated dollar value per hectare, which will result in a personalised NPV for them to have their piece of land in native forestry. This option also means that someone else doing their own personalised valuation of the project may produce quite a different result.

Alternatively, the value of these recognised but not counted benefits may simply be acknowledged and, if the NPV is already positive, ignored on the grounds that failing to specifically include them does not affect the project’s viability. When NPV, without inclusion of these benefits is negative, these unvalued benefits can be accounted for, to some degree, by simply accepting that projects with a negative NPV below some specified level will be treated as economically viable. In this case the user is saying that in their view the NPV of these recognised but unvalued benefits exceed the cut-off negative figure.