The Economics Calculator is aimed at assisting users from individual landowners interested in costs and revenues to large scale corporate planters or forestry sector investors wanting to develop a business plan for establishing native forestry and requiring calculation of the Net Present Value (NPV). Refer to the Introduction step in the menu for an explanation of NPV.
Users are invited to enter data for each step of the menu. This is a systematic list of tasks and items that covers establishment costs, post planting costs, the option of silivicultural costs for those interested in managing their stands as a long term specialty timber resource, and annual costs such as rates and ongoing pest animal control. Potential income streams including carbon, harvested timber, and and then This includes:
Calculating carbon is a key component of the economics calculator. Users are provided with three options to select for calculating the value of carbon sequestration based on the Ministry of Primary Industries’ Look Up tables, the Tane’s Tree Trust carbon calculator for planted native forest (using the TTT carbon calculator within this toolkit), or entering their own estimates for carbon sequestration based on their own measurements.
Returns from harvesting are based on continuous cover forestry methods. The default values are assuming the first harvest will be at 60 years after planting followed by further harvests at 20 year intervals thereafter. However, users of the calculator can enter in their own timelines and expected costs and revenue for each harvest.
The calculator also allows users to input their estimated or actual costs and revenues from sources other than carbon and timber. Where users have an income for a product such as honey, or an activity such as a tourist lodge associated with the forest for paying guests, then these values can be added along with age when the first revenue occurs and the period between revenue payments. There may be several income streams that users can enter such data.
However, there are many other positive outcomes (benefits) of native forest establishment such as enhancement of a landscape, addition to biodiversity, water quality improvements or the value of reduced erosion, that can be extremely difficult to put a dollar value on and will be highly site and landowner specific (for more information refer to the Forest Benefits). For these benefits that are difficult to quantify in economic terms users have an option of entering their own estimated dollar value per hectare for these additional benefits – 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 by the user as being very important to them for establishing and managing their native forest. If the NPV is already positive, then these additional benefits can be ignored on the grounds that failing to specifically include them does not affect the project’s viability. However, when the NPV without inclusion of these benefits is negative, users can choose to account for these unvalued benefits to some degree and therefore may well want to accept that projects with a negative NPV below some specified level will be treated as economically viable.
Once data is entered users press the “Finish and view report” button to provide a PDF summary of user-generated costs for establishment and management, and if timber production is selected as a potential revenue stream, the harvesting costs. The income is calculated from the various products or services selected by the user such as carbon, timber and other incomes streams. From this the Net Present Value is then calculated and displayed at the end of the report.