A REAL OPTIONS APPROACH TO THE DETERMINATION OF OPTIMAL HARVESTING AGE FOR TWO KINDS OF FOREST MANAGEMENT

• Autor(a) principal: Broz, Diego Ricardo
• Data de Publicação: 2016
• Outros Autores: Woitschach, Guillermo B. M., Milanesi, Gastón
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Cerne (Online)
• Texto Completo: https://cerne.ufla.br/site/index.php/CERNE/article/view/964
• topic: Binomial grid; shift; exotic option.

 It was studied Real Options approach as a financial-economic tool for strategic decision-making in the determination of optimal harvesting age in two kinds of forestry exploitation, a high-value one and a pulp-producing unit. It is assumed that the projection of selling prices of the byproducts follows a Brownian geometric stochastic process, while production is determined by means of a simulation of forestry turnover. The decision of when to harvest arises from the comparison, at each period, of the cash-flow at each node ( ) of a binomial lattice and its expected value in the next period ( ). The Real Values approach indicates that the optimal ages are at 18 years for high-value units and 17 years for pulp producing ones.