Financial model for reforestation projects

May 2010
Africa 500000 ha
This document is a template with assumptions
Please ensure that the assumptions are correct for your specific project

Pieter Hoff
phoff@aquaproholland.com
+31 654 340 410
Wout Hoff

NOTES
In the 'sensitivity analysis' the columns 'conservative' and 'optimistic' are not interactive. Only the column 'base' is interactive with 'input and output'
values marked in blue are calculated automatically; do not amend these cells.
values marked in red are taken from the sheet 'Notes and Assumptions'; do not amend these cells.
Sheets
Front page
Notes and Assumptions
Input and Output
Workings
Annex 1 - Timber prices
Annex 2 - Bushes harvest prices
Annex 3 - Carbon credit prices
Annex 4 - FCF
Annex 5 - Plant scheme
Annex 6 - Employment

Cover page
Guidance note and regional assumptions for cost and employment calculation
Overview of key project information (financials, planning)
Financial model
Graphical presentation of development of timber prices over project duration
Graphical presentation of development of bushes harvest prices over project duration
Graphical presentation of development of carbon credit prices over project duration
Graphical presentation of development of Free Cash Flow
Graphical presentation of potential planting scheme for 1 ha
Graphical presentation of manpower needed during project lifetime

Model, calculations, values and assumptions have been validated by Forestry Service Group (www.forestryservicegroup.com)
ASSUMPTIONS
Units
Single value
This sheet lists the values which are market red in the Input and Output sheet.
Region
Category
Annual inflation rate costs
Cost of land (if freehold)
Land lease
Value of land at end of project
Land preparation cost
Custodial management cost
Costprice labour
Custodial management cost
Maintenance cost trees and bushes - year 2-8
Maintenance cost trees and bushes - from year 9
Harvesting cost timber - harvest until yr 20
Harvesting cost timber - harvest from yr 21
Harvesting cost bushes annual production (fruit/nuts)
Portfolio model
Start of planting
Project 1
Project 1
Project 2
Project 3
Project 4
Project 5
Project 6
Project 7
Project 8
Project 9
Project 10
Number of projects

Groasis

Africa
value
%
USD/ha
USD/ha
USD/ha
USD/ha
USD/ha
USD/day
USD/ha
USD/ha
USD/ha
USD/ha
USD/ha
USD/ha

Europe
5.7%
100
0.10
2500
40
80
10
100
200
100
250
210
500

2.1%
350
70
10000
140
230
60
350
700
350
750
510
1500

USA

fix cost
2.2%
250
50
7500
120
200
50
300
600
300
650
450
1300

days

20
50

2
3

50
100
50
150
150
300

5
10
5
10
6
20

2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
10

Financial model for a reforestation project

Copyright Wout Hoff

OUTPUT
Project size
Project duration
Cost of capital
Tax rate
Net Present Value (NPV)
Internal Rate of Return (IRR)
Capital employed
Payback (break even)
Tonnes of CO2 captured over project lifetime
Cost per tonne of CO2 (investment only)
NPV generated per tonne of CO2
Employment generated for 35 years (average)

Groasis

Units
ha
years
%
%
million USD
%
million USD
years
million tonnes
USD/tonne
USD/tonne
FTE

Financial model for a reforestation project

1 Project
50,000
35
10%
20%
1,249
18.7%
(547)
9
17.5
31.25
71.36
11,417

Copyright Wout Hoff

INPUT
Project dates and currency
Start of planting
Planting in year
Removing of waterboxes in year
First bushes (fruit/nuts) harvest in year
Last hardwood harvest in year

Units
year

Location of project
Currency
Annual inflation rate - costs
Cost of capital

2011
1
2
5
35
Africa
USD
5.70%
10.0%

Investment
Ownership type of land
Cost of land (if freehold)
Land lease
Number of ha
Value of land at end of project

USD/ha
USD/ha/yr
USD/ha

Baseline study
Land preparation cost
Custodial management cost
Number of trees per ha
Number of trees planted
of which softwood
of which hardwood
Number of bushes per ha
Number of bushes planted
Number of m2 per tree/bush

USD
USD/ha
USD/ha

%
%

m2

Groasis waterbox ownership model

Groasis waterbox discount
Groasis waterbox cost
Residual value of waterbox
Residual value of waterbox
Number of Groasis waterboxes needed

USD/box
%
USD/box

Planting material trees (sapling/nut/seed)

Planting material bushes (sapling/nut/seed)
Labour needed to plant 1 tree or bush
Costprice labour
Costprice labour to plant 1 trees or bush
Energy cost for planting / removing
Equipment cost per ha for planting / removing
Total cost per tree
Total cost per bush
Total cost per ha for trees (trees + planting)
Total cost per ha for bushes (bushes + planting)

USD/tree
USD/bush
minutes
USD/day
USD/tree or bush
USD/waterbox
USD/ha
USD/tree
USD/bush
USD/ha
USD/ha

Carbon - Upfront admin costs (only if carbon = yes)

Carbon - Upfront verification costs (only if carbon = yes)

Groasis

Single value

USD
USD

Financial model for a reforestation project

freehold
100
0.10
50,000
2,500
125,000
40
80
2,667
133,350,000
80%
20%
1,333
66,650,000
2.5
lease
10%
5
10%
0.00
100,000,000
0.20
0.25
1.5
10
0.03
0.01
75
0.26
0.31
693
413
150,000
1,050,000

Copyright Wout Hoff

O&M costs (annual cost)

Overhead and management
Custodial management cost
Maintenance cost trees and bushes - year 2-8
Maintenance cost trees and bushes - from year 9

USD/yr
USD/ha
USD/ha
USD/ha

Harvesting cost timber - harvest until yr 20

Harvesting cost timber - harvest from yr 21
Harvesting cost bushes annual production (fruit/nuts)

USD/ha
USD/ha
USD/ha

250
210
500

minutes
USD/waterbox
USD/waterbox
USD/ha

2
0.04
0.05
103

2%

Labour needed to remove 1 waterbox

Costprice labour to remove 1 waterbox
Total cost waterbox removal
Total cost waterbox removal per ha
Unforeseen
FSC - Admin cost (certificate)
FSC - Project lifetime admin and control costs
Carbon - Project lifetime admin costs (only if carbon = yes)
Carbon - Project lifetime control costs (only if carbon = yes)
Harvest from trees and bushes
Survival rate trees - after planting
Survival rate trees - after first harvest
Survival rate trees - after second harvest
Amount of timber not harvested due to death of trees
Hardwood - Timber price in year of planting
Softwood - Timber price in year of planting
Price discount of timber of interim harvest 1 and 2
Indexation of timber prices - annual

USD
USD
USD/ha
USD/ha

25,000
10,000
2.0
4.0

%
%
%
%

90%
95%
95%
14.4%

USD/m3
USD/m3
%

400
150
50%
1.0%

First interim timber harvest in year

Amount of trees harvested in first harvest
Timber production per tree in first harvest

% of trees
m3

10
36%
0.30

Second interim timber harvest in year

Amount of trees harvested in second harvest
Timber production per tree in second harvest

% of trees
m3

20
17%
0.70

Third interim timber harvest in year

Amount of trees harvested in third harvest
Timber production per tree in third harvest

% of trees
m3

25
16%
1.00

Last timber harvest in year

Amount of timber remaining for last harvest
Timber production per tree in last harvest

% of trees
m3

35
16%
1.00

First bushes harvest (fruit/nuts) in year

Annual production per bush after first harvest
Increase of production per bush after first harvest
Price of product harvested from bushes (at planting)
Indexation of bushes harvest prices - annual
Carbon Credits (CDM / VER)
Carbon credits included
Start of Carbon credits revenue
CO2 absorption per year
1carbon credit
Carbon credit price
Indexation of carbon prices
Amount of credits that can be sold

Groasis

712,500
100
200
100

5
2.00
3.0%
0.75
2.0%

kg
% per year
USD/kg

yes
year
tonnes/ha
t of CO2
USD
%
%

Financial model for a reforestation project

2
10
1
6.00
6%
80%

Copyright Wout Hoff

Financial structure NOT INCLUDED

Equity
Debt
Government grant
Principal (size of loan)
Tenor (loan duration)
Grace period (how many years free of repayment)
Debt cost (fixed rate)
Arrangement and committment fees
Book depreciation, years
Equity investment
Cost of capital
Size of grant

30.0%
60.0%
10.0%
USD
25
1
1.0%
10
USD
7.0%
USD

Tax
Corporate tax

20.0%

Depreciation NOT INCLUDED

Depreciation method
Depreciation
Annual depreciation

linear
years
USD

OUTPUT - DETAIL
Employment
In year 1
Baseline study
Land preparation
Custodial management
Planting
Carbon - Upfront admin and verification costs

Units

Single value

hr
hr
hr
hr
hr

1,280
800,000
1,200,000
12,500,000
4,800

hr
hr
hr
hr
hr
hr
hr
hr
hr
hr
hr
hr

8,800
70,000,000
16,666,667
28,000,000
54,000,000
240,000,000
1,440,000
684,000
389,880
389,880
4,000
163,200

Secondary employment generated (waterboxes, processing

annual harvest / timber harvest / supply chain) - additional 50%

hr

213,126,253

Total employment generated over project lifetime

average FTE/yr for 35 years

hr
FTE

639,378,760
11,417

Over project lifetime (yr 2 - 35)

Overhead and management
Custodial management
Waterbox removal
Maintenance - year 2-8
Maintenance - year 8 onwards
Harvesting of bushes (fruit/nuts)
Harvesting of trees (timber) - first interim harvest
Harvesting of trees (timber) - second interim harvest
Harvesting of trees (timber) - third interim harvest
Harvesting of trees (timber) - final harvest
FSC - Project lifetime admin and control
Carbon - Project lifetime admin and control

Groasis

10

Financial model for a reforestation project

Copyright Wout Hoff

year of operation
Units

1
2011

Total

2
2012

3
2013

4
2014

5
2015

6
2016

7
2017

8
2018

9
2019

10
2020

11
2021

12
2022

13
2023

14
2024

15
2025

16
2026

17
2027

18
2028

Cash flow
Investment costs
Cost of land - freehold
Baseline study
Land preparation
Custodial management
Waterbox costs for trees
Waterbox costs for bushes
Planting costs trees
Planting costs bushes
Carbon - Upfront admin (only if CDM = yes)
Carbon - Upfront control (only if CDM = yes)

kUSD
kUSD
kUSD
kUSD
kUSD
kUSD
kUSD
kUSD
kUSD
kUSD

(5,000)
(132)
(2,114)
(4,228)
(317,140)
(158,510)
(36,647)
(21,839)
(159)
(1,110)

(5,000)
(132)
(2,114)
(4,228)
(317,140)
(158,510)
(36,647)
(21,839)
(159)
(1,110)

Total investment costs

kUSD

(546,879)

(546,879)

O&M costs
Land lease - leasehold
kUSD
Overhead and management
kUSD
Custodial management
kUSD
Maintenance year 2-8
kUSD
Maintenance from year 9
kUSD
Removal of waterboxes
kUSD
Trees - first partial harvest
kUSD
Trees - second partial harvest
kUSD
Trees - third partial harvest
kUSD
Trees - final harvest
kUSD
Bushes - annual harvesting
kUSD
Unforeseen
kUSD
FSC - Admin in year before first harvest
kUSD
FSC - Project lifetime admin and control costs kUSD
Carbon - Project lifetime admin costs (only if CDM
kUSD
= yes)
Carbon - Project lifetime control costs (only if CDM
kUSD
= yes)

(78,750)
(547,345)
(92,926)
(500,882)
(5,772)
(7,834)
(6,477)
(6,820)
(11,872)
(2,648,063)
(78,135)
(41)
(985)
(11,053)
(22,105)

(753)
(15)
(106)
(211)

(796)
(5,586)
(11,172)
(5,772)
(467)
(112)
(223)

(841)
(5,905)
(11,809)
(371)
(118)
(236)

(889)
(6,241)
(12,482)
(392)
(125)
(250)

(940)
(6,597)
(13,194)
(32,985)
(1,074)
(132)
(264)

(994)
(6,973)
(13,946)
(34,865)
(1,136)
(139)
(279)

(1,050)
(7,370)
(14,741)
(36,852)
(1,200)
(147)
(295)

(1,110)
(7,791)
(15,581)
(38,953)
(1,269)
(156)
(312)

(1,173)
(8,235)
(8,235)
(41,173)
(1,176)
(41)
(165)
(329)

(1,240)
(8,704)
(8,704)
(7,834)
(43,520)
(1,400)
(17)
(174)
(348)

(1,311)
(9,200)
(9,200)
(46,001)
(1,314)
(18)
(184)
(368)

(1,386)
(9,725)
(9,725)
(48,623)
(1,389)
(19)
(194)
(389)

(1,465)
(10,279)
(10,279)
(51,394)
(1,468)
(21)
(206)
(411)

(1,548)
(10,865)
(10,865)
(54,324)
(1,552)
(22)
(217)
(435)

(1,636)
(11,484)
(11,484)
(57,420)
(1,640)
(23)
(230)
(459)

(1,730)
(12,139)
(12,139)
(60,693)
(1,734)
(24)
(243)
(486)

(1,828)
(12,831)
(12,831)
(64,153)
(1,833)
(26)
(257)
(513)

(1,933)
(13,562)
(13,562)
(67,809)
(1,937)
(27)
(271)
(542)

Total O&M costs

kUSD

(4,019,061)

(1,085)

(24,129)

(19,281)

(20,380)

(55,186)

(58,332)

(61,657)

(65,171)

(60,528)

(71,942)

(67,597)

(71,450)

(75,522)

(79,827)

(84,377)

(89,187)

(94,270)

(99,644)

Income
Value of land
Waterboxes residual value
Trees - first interim harvest
Trees - second interim harvest
Trees - third interim harvest
Trees - final harvest
Bushes - annual harvest
Carbon credits income

kUSD
kUSD
kUSD
kUSD
kUSD
kUSD
kUSD
kUSD

125,000
1,193,141
1,460,750
4,167,142
12,274,980
8,131,713
280,946

2,697

2,858

3,030

113,692
3,212

119,445
3,404

125,489
3,609

131,838
3,825

138,509
4,055

1,193,141
145,518
4,298

152,881
4,556

160,617
4,829

168,744
5,119

177,283
5,426

186,253
5,752

195,677
6,097

205,579
6,463

215,981
6,850

Total income

kUSD

27,633,673

2,697

2,858

3,030

116,904

122,849

129,097

135,664

142,564

1,342,957

157,437

165,446

173,863

182,709

192,005

201,774

212,041

222,831

kUSD
kUSD
kUSD
kUSD

9,475,443
(4,330,190)
5,145,253
(1,895,089)

(547,964)
(547,964)
-

(21,432)
(547,964)
(569,397)
-

(16,422)
(569,397)
(585,819)
-

(17,350)
(585,819)
(603,169)
-

61,718
(603,169)
(541,451)
-

64,518
(541,451)
(476,934)
-

67,441
(476,934)
(409,493)
-

70,493
(409,493)
(339,000)
-

82,037
(339,000)
(256,964)
-

1,271,015
(256,964)
1,014,052
(202,810)

89,840
89,840
(17,968)

93,996
93,996
(18,799)

98,341
98,341
(19,668)

102,882
102,882
(20,576)

107,628
107,628
(21,526)

112,588
112,588
(22,518)

117,771
117,771
(23,554)

123,188
123,188
(24,638)

7,580,355
854,575
66,038,770

(547,964)
(498,149)
(547,964)

(21,432)
(17,713)
(569,397)

(16,422)
(12,338)
(585,819)

(17,350)
(11,850)
(603,169)

61,718
38,322
(541,451)

64,518
36,418
(476,934)

67,441
34,608
(409,493)

70,493
32,885
(339,000)

82,037
34,792
(256,964)

1,068,205
411,839
811,241

71,872
25,191
883,114

75,197
23,960
958,311

Tax
Earnings before tax
Tax loss carry forward
Taxable income
Total Tax
Free cash flow
Discounted FCF
Cumulative FCF (not discounted)

NPV
IRR
Capital employed
Payback

Groasis

78,673
22,789
1,036,983

82,305
21,674
1,119,289

86,102
20,612
1,205,391

90,070
19,602
1,295,461

94,217
18,640
1,389,677

98,550
17,725
1,488,228

1,248,738
18.7%
(546,879)
9

Financial model for a reforestation project

Copyright Wout Hoff

19
2029

20
2030

21
2031

22
2032

23
2033

24
2034

25
2035

26
2036

27
2037

28
2038

29
2039

30
2040

31
2041

32
2042

33
2043

34
2044

35
2045

(2,043)
(14,335)
(14,335)
(71,675)
(2,048)
(29)
(287)
(573)

(2,159)
(15,152)
(15,152)
(6,477)
(75,760)
(2,294)
(30)
(303)
(606)

(2,282)
(16,016)
(16,016)
(80,078)
(2,288)
(32)
(320)
(641)

(2,412)
(16,929)
(16,929)
(84,643)
(2,418)
(34)
(339)
(677)

(2,550)
(17,893)
(17,893)
(89,467)
(2,556)
(36)
(358)
(716)

(2,695)
(18,913)
(18,913)
(94,567)
(2,702)
(38)
(378)
(757)

(2,849)
(19,991)
(19,991)
(6,820)
(99,957)
(2,992)
(40)
(400)
(800)

(3,011)
(21,131)
(21,131)
(105,655)
(3,019)
(42)
(423)
(845)

(3,183)
(22,335)
(22,335)
(111,677)
(3,191)
(45)
(447)
(893)

(3,364)
(23,609)
(23,609)
(118,043)
(3,372)
(47)
(472)
(944)

(3,556)
(24,954)
(24,954)
(124,771)
(3,565)
(50)
(499)
(998)

(3,759)
(26,377)
(26,377)
(131,883)
(3,768)
(53)
(528)
(1,055)

(3,973)
(27,880)
(27,880)
(139,401)
(3,983)
(56)
(558)
(1,115)

(4,199)
(29,469)
(29,469)
(147,346)
(4,210)
(59)
(589)
(1,179)

(4,439)
(31,149)
(31,149)
(155,745)
(4,450)
(62)
(623)
(1,246)

(4,692)
(32,925)
(32,925)
(164,623)
(4,703)
(66)
(658)
(1,317)

(4,959)
(34,801)
(34,801)
(11,872)
(174,006)
(5,209)
(70)
(696)
(1,392)

(105,324)

(117,934)

(117,673)

(124,380)

(131,470)

(138,963)

(153,841)

(155,257)

(164,106)

(173,460)

(183,348)

(193,798)

(204,845)

(216,521)

(228,863)

(241,908)

(267,807)

226,910
7,261

1,460,750
238,391
7,697

250,454
8,159

263,127
8,648

276,441
9,167

290,429
9,717

4,167,142
305,125
10,300

320,564
10,919

336,785
11,574

353,826
12,268

371,729
13,004

390,539
13,784

410,300
14,611

431,061
15,488

452,873
16,417

475,789
17,402

125,000
12,274,980
499,863
18,447

234,171

1,706,838

258,613

271,775

285,609

300,146

4,482,568

331,483

348,358

366,094

384,734

404,323

424,912

446,550

469,291

493,191

12,918,291

128,848
128,848
(25,770)

1,588,904
1,588,904
(317,781)

140,940
140,940
(28,188)

147,395
147,395
(29,479)

154,139
154,139
(30,828)

161,183
161,183
(32,237)

4,328,727
4,328,727
(865,745)

176,226
176,226
(35,245)

184,252
184,252
(36,850)

192,634
192,634
(38,527)

201,386
201,386
(40,277)

210,525
210,525
(42,105)

220,067
220,067
(44,013)

230,028
230,028
(46,006)

240,428
240,428
(48,086)

251,283
251,283
(50,257)

12,650,484
12,650,484
(2,530,097)

103,078
16,854
1,591,306

Groasis

1,271,124
188,944
2,862,429

112,752
15,236
2,975,181

117,916
14,486
3,093,098

123,311
13,771
3,216,409

128,946
13,091
3,345,355

3,462,982
319,619
6,808,337

140,981
11,829
6,949,318

147,401
11,243
7,096,719

154,107
10,686
7,250,826

161,109
10,156
7,411,935

168,420
9,652
7,580,355

176,053
9,172
7,756,408

184,023
8,716
7,940,431

Financial model for a reforestation project

192,342
8,282
8,132,773

201,026
7,869
8,333,799

10,120,387
360,125
18,454,186

Copyright Wout Hoff

year of portfolio
FCF

Waterbox investment
Project 1
Project 2
Project 3
Project 4
Project 5
Project 6
Project 7
Project 8
Project 9
Project 10
Total EBIT

Units
kUSD

1
2011

Total
(475,650)

5
2015

6
2016

(475,650)

kUSD

23,543,383

kUSD

23,543,383

kUSD

23,543,383

kUSD

23,543,383

kUSD

23,543,383

kUSD

23,543,383

kUSD

23,543,383

kUSD

23,543,383

kUSD
kUSD

23,543,383
234,958,180

kUSD
kUSD

228,096,552

Total Tax

kUSD

(46,991,636)

(72,314)

(547,964)

(6,861,628)

Free cash flow

kUSD
Discounted FCF
kUSD
Cumulative FCF (not disc) kUSD

187,966,544
10,710,425
4,769,384,258

NPV

10,710,425

Payback

4
2014

23,543,383

Taxable income

Capital employed

3
2013

kUSD

Tax loss carry forward

IRR

2
2012

29.1%
(1,198,793)
9

(547,964)
(547,964)
(498,149)
(547,964)

(21,432)

(16,422)

(17,350)

61,718

(72,314)

(21,432)

(16,422)

(17,350)

64,518
61,718

(72,314)

(21,432)

(16,422)

(17,350)

(72,314)

(21,432)

(16,422)

(72,314)

(21,432)
(72,314)

(93,747)

(110,169)

(127,519)

(65,801)

(1,284)

(547,964)

(641,711)

(751,880)

(879,398)

(945,200)

(641,711)

(751,880)

(879,398)

(945,200)

(946,483)

(93,747)
(77,476)
(641,711)

(110,169)
(82,772)
(751,880)

(127,519)
(87,097)
(879,398)

(65,801)
(40,857)
(945,200)

(1,284)
(725)
(946,483)

7
2017

8
2018

9
2019

10
2020

11
2021

12
2022

13
2023

14
2024

15
2025

67,441

70,493

82,037

1,271,015

89,840

93,996

98,341

102,882

107,628

64,518

67,441

70,493

82,037

1,271,015

89,840

93,996

98,341

102,882

61,718

64,518

67,441

70,493

82,037

1,271,015

89,840

93,996

98,341

(17,350)

61,718

64,518

67,441

70,493

82,037

1,271,015

89,840

93,996

(16,422)

(17,350)

61,718

64,518

67,441

70,493

82,037

1,271,015

89,840

(21,432)

(16,422)

(17,350)

61,718

64,518

67,441

70,493

82,037

1,271,015

(72,314)

(21,432)

(16,422)

(17,350)

61,718

64,518

67,441

70,493

82,037

(72,314)

(21,432)

(16,422)

(17,350)

61,718

64,518

67,441

70,493

(72,314)

(21,432)

(16,422)

(17,350)

61,718

64,518

67,441

(21,432)
1,651,856

(16,422)
1,767,285

61,718
2,002,280

64,518
2,048,189

66,157

136,650

218,686

(72,314)
1,489,702

(946,483)

(880,326)

(743,676)

(524,990)

(880,326)

(743,676)

(524,990)

964,712

66,157
33,949
(880,326)

136,650
63,748
(743,676)

218,686
92,744
(524,990)

(192,942)
1,296,759
499,957
771,769

(17,350)
1,882,048

1,651,856

1,767,285

1,882,048

2,002,280

2,048,189

(330,371)
1,321,485
463,172
2,093,254

(353,457)
1,413,828
450,489
3,507,082

(376,410)
1,505,638
436,130
5,012,721

(400,456)
1,601,824
421,810
6,614,544

(409,638)
1,638,552
392,256
8,253,096

16
2026

17
2027

18
2028

19
2029

20
2030

21
2031

22
2032

23
2033

24
2034

112,588

117,771

123,188

128,848

1,588,904

140,940

147,395

154,139

161,183

107,628

112,588

117,771

123,188

128,848

1,588,904

140,940

147,395

154,139

102,882

107,628

112,588

117,771

123,188

128,848

1,588,904

140,940

147,395

98,341

102,882

107,628

112,588

117,771

123,188

128,848

1,588,904

140,940

93,996

98,341

102,882

107,628

112,588

117,771

123,188

128,848

1,588,904

89,840

93,996

98,341

102,882

107,628

112,588

117,771

123,188

128,848

1,271,015

89,840

93,996

98,341

102,882

107,628

112,588

117,771

123,188

82,037

1,271,015

89,840

93,996

98,341

102,882

107,628

112,588

117,771

70,493

82,037

1,271,015

89,840

93,996

98,341

102,882

107,628

112,588

67,441
2,096,259

70,493
2,146,590

82,037
2,199,285

1,271,015
2,246,096

89,840
2,563,985

93,996
2,615,085

98,341
2,668,484

102,882
2,724,282

107,628
2,782,583

2,096,259

2,146,590

2,199,285

2,246,096

2,563,985

2,615,085

2,668,484

2,724,282

2,782,583

(419,252)
1,677,008
364,966
9,930,103

(429,318)
1,717,272
339,753
11,647,375

(439,857)
1,759,428
316,449
13,406,803

(449,219)
1,796,877
293,804
15,203,679

(512,797)
2,051,188
304,896
17,254,867

(523,017)
2,092,068
282,702
19,346,935

(533,697)
2,134,787
262,250
21,481,722

(544,856)
2,179,426
243,394
23,661,148

(556,517)
2,226,067
226,003
25,887,214

25
2035

26
2036

27
2037

28
2038

29
2039

30
2040

31
2041

32
2042

33
2043

4,328,727

176,226

184,252

192,634

201,386

210,525

220,067

230,028

240,428

161,183

4,328,727

176,226

184,252

192,634

201,386

210,525

220,067

230,028

154,139

161,183

4,328,727

176,226

184,252

192,634

201,386

210,525

220,067

147,395

154,139

161,183

4,328,727

176,226

184,252

192,634

201,386

210,525

140,940

147,395

154,139

161,183

4,328,727

176,226

184,252

192,634

201,386

1,588,904

140,940

147,395

154,139

161,183

4,328,727

176,226

184,252

192,634

128,848

1,588,904

140,940

147,395

154,139

161,183

4,328,727

176,226

184,252

123,188

128,848

1,588,904

140,940

147,395

154,139

161,183

4,328,727

176,226

117,771

123,188

128,848

1,588,904

140,940

147,395

154,139

161,183

4,328,727

112,588
7,003,683

117,771
7,067,321

123,188
7,133,802

128,848
7,203,248

1,588,904
7,275,786

140,940
5,897,407

147,395
5,976,533

154,139
6,059,166

161,183
6,145,455

7,003,683

7,067,321

7,133,802

7,203,248

7,275,786

5,897,407

5,976,533

6,059,166

6,145,455

(1,400,737)

(1,413,464)

(1,426,760)

(1,440,650)

(1,455,157)

(1,179,481)

(1,195,307)

(1,211,833)

(1,229,091)

5,602,946
517,130
31,490,161

5,653,857
474,389
37,144,017

5,707,042
435,320
42,851,059

5,762,598
399,598
48,613,657

5,820,629
366,929
54,434,286

4,717,925
270,377
59,152,211

4,781,227
249,096
63,933,438

4,847,333
229,582
68,780,771

4,916,364
211,683
73,697,135

34
2044

35
2045

36
2046

37
2047

38
2048

39
2049

40
2050

41
2051

42
2052

251,283

12,650,484

240,428

251,283

12,650,484

230,028

240,428

251,283

12,650,484

220,067

230,028

240,428

251,283

12,650,484

210,525

220,067

230,028

240,428

251,283

12,650,484

201,386

210,525

220,067

230,028

240,428

251,283

12,650,484

192,634

201,386

210,525

220,067

230,028

240,428

251,283

12,650,484

184,252

192,634

201,386

210,525

220,067

230,028

240,428

251,283

12,650,484

176,226

184,252

192,634

201,386

210,525

220,067

230,028

240,428

251,283

4,328,727
6,235,555

176,226
14,557,312

184,252
14,381,086

192,634
14,196,834

201,386
14,004,201

210,525
13,802,815

220,067
13,592,290

230,028
13,372,223

240,428
13,142,195

6,235,555

14,557,312

14,381,086

14,196,834

14,004,201

13,802,815

13,592,290

13,372,223

13,142,195

(1,247,111)

(2,911,462)

(2,876,217)

(2,839,367)

(2,800,840)

(2,760,563)

(2,718,458)

(2,674,445)

(2,628,439)

4,988,444
195,260
78,685,579

11,645,850
414,407
90,331,428

11,504,869
372,173
101,836,297

11,357,467
334,004
113,193,765

11,203,361
299,520
124,397,125

11,042,252
268,376
135,439,377

10,873,832
240,257
146,313,209

10,697,779
214,879
157,010,988

10,513,756
191,984
167,524,744

43
2053

44
2054

45
2055

12,650,484

251,283
12,901,767

12,650,484
12,650,484

0
-

12,901,767

12,650,484

(2,580,353)

(2,530,097)

10,321,414
171,338
177,846,157

10,120,387
152,728
187,966,544

187,966,544

187,966,544

187,966,544

187,966,544

187,966,544

187,966,544

187,966,544

187,966,544

187,966,544

187,966,544

187,966,544

187,966,544

187,966,544

187,966,544

SENSITIVITY ANALYSIS
In the 'sensitivity analysis' the columns 'conservative' and 'optimistic' are not interactive. Only the column 'base case' is interactive with 'input and output'
Base case: Assumes a project in
Africa
of
50,000
ha freehold land / leasing the waterbox.
Scenario 1 - Biomass at harvest

Timber production harvest 1 (m3/tree)

Timber production harvest 2 (m3/tree)
Timber production harvest 3 (m3/tree)
Timber production last harvest (m3/tree)
Net Present Value (NPV)
Internal Rate of Return (IRR)

kUSD
%

Conservative
0.15
0.35
0.50
0.50
631,649
15.5%

Base case
0.30
0.70
1.00
1.00
1,248,738
18.7%

Optimistic
0.45
1.05
1.50
1.50
1,830,484
20.9%

kUSD
%

Conservative
0%
150
400
994,339
17.7%

Base case
1%
192.36
566.64
1,248,738
18.7%

Optimistic
2%
246.09
799.96
1,536,818
19.4%

kUSD
%

Conservative
60%
60%
60%
527,362
15.4%

Base case
90%
95%
95%
1,248,738
18.7%

Optimistic
98%
98%
98%
1,389,055
19.1%

kUSD
%
FTE

Conservative
1.00
1%
0.50
1%
471,198
13.4%
11,417

Base case
2.00
3%
0.75
2%
1,248,738
18.7%
11,417

Optimistic
3.00
5%
1.00
3%
3,228,865
26.9%
11,417

kUSD
%

Conservative
2.00
2%
3.28
1,219,832
18.4%

Base case
6.00
6%
25.75
1,248,738
18.7%

Optimistic
6.00
6%
25.75
1,248,738
18.7%

kUSD
%

Conservative
15
1,137,390
17.8%

Base case
10
1,248,738
18.7%

Optimistic
5
1,360,087
19.6%

Scenario 2 - Development of timber prices

Indexation of timber prices - annual

Price of softwood, year 25 (USD/m3)
Price of hardwood, year 35 (USD/m3)
Net Present Value (NPV)
Internal Rate of Return (IRR)
Scenario 3 - Survival rate of trees

Survival rate trees - after planting

Survival rate trees - after first harvest
Survival rate trees - after second harvest
Net Present Value (NPV)
Internal Rate of Return (IRR)
Scenario 4 - Annual bushes harvest

Production in year of first harvest (kg)

Annual production increase
Price of product in year 1 (USD/kg)
Indexation of product prices
Net Present Value (NPV)
Internal Rate of Return (IRR)
Manpower required during project

No bushes planted
assumes no bushes
planted, no harvest
406,022
13.5%
11,157

Scenario 5 - Development of carbon credit prices

Start price (USD/credit)

Indexation of carbon credit prices - annual
Price in year 25 (USD/credit)
Net Present Value (NPV)
Internal Rate of Return (IRR)
Scenario 6 - Labour cost

Costprice labour (USD/day)

Net Present Value (NPV)
Internal Rate of Return (IRR)
Scenario 7 - Changes required to get NPV = 0
scenario a)
Costprice labour (USD/day)
or
scenario b)
Survival rate trees - after planting
Survival rate trees - after first harvest
Survival rate trees - after second harvest
Production in year of first harvest (kg)
Annual production increase
Price of product in year 1 (USD/kg)
Indexation of product prices

Groasis

Base case
10
the values to the left
90% need to be amended to
95% the values in the column
95% to the right to get NPV =
2.00
0
3.0%
0.75
2.0%

Financial model for a reforestation project

Changes to
90

60%
60%
60%
1.96
2.0%
0.75
2.0%

Copyright Wout Hoff

605.00

Price (USD/m3)

505.00
405.00
305.00
205.00
105.00
5.00

Year
hardwood timber price (USD/m3)

softwood timber price (USD/m3)

1.60
1.40

Price (USD/kg)

1.20
1.00
0.80
0.60
0.40
0.20

Year
bushes harvest price (USD/kg)

50.00
45.00

Price (USD/credit)

40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00

Year
Carbon credit prices (USD/credit)

(5,000,000)

Year

Cumulative Free Cash Flow (kUSD)

2045

2044

2043

2042

2041

2040

2039

2038

2037

2036

2035

2034

2033

2032

2031

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

Cumulative FCF (kUSD)

20,000,000

15,000,000
Break even
in 2019

10,000,000

5,000,000

Legend
2 trees, planted in 1 waterbox
2667 trees / ha
2 bushes, planted in 1 waterbox 1333 bushes / ha
Planting scheme (the grid below represents 1ha, 100m x 100m)
1

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100

Potential planting scheme for 1 ha

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99 100 101 102 103 104 105

Employment generated (FTE) over project lifetime

25,000

20,000
15,000
10,000

5,000
-

Baseline study
Overhead and management
Waterbox removal
Maintenance - year 8 onwards
Harvesting of trees (timber) - first interim harvest
Harvesting of trees (timber) - third interim harvest
FSC - Admin and control
Carbon - Admin, verification and control

Planting
Custodial management
Maintenance - year 2-8
Harvesting of bushes (fruit/nuts)
Harvesting of trees (timber) - second interim harvest
Harvesting of trees (timber) - final harvest
Carbon - Admin, verification and control
Secondary employment generated