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.
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.
Timing units: years from planting
Cost units: $/ha
Any additional one-off costs such as fencing repairs, access maintenance, etc.
Costs that occur annually from the end of the first year after planting.
There are 3 options for carbon sequestration values:
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.
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.
Click the “Finish and view report” button to open the report as a PDF document in a new tab. You can save the PDF to your computer or print it.
If you want to make changes you can go back to an earlier step in the calculator and modify the entered values. Then come back to this final step to generate a new report.