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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 o
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 Cover page
Notes and Assumptions Guidance note and regional assumptions for cost and employment calculation
Input and Output Overview of key project information (financials, planning)
Workings Financial model
Annex 1 - Timber prices Graphical presentation of development of timber prices over project duration
Annex 2 - Bushes harvest prices Graphical presentation of development of bushes harvest prices over project duration
Annex 3 - Carbon credit prices Graphical presentation of development of carbon credit prices over project duration
Annex 4 - FCF Graphical presentation of development of Free Cash Flow
Annex 5 - Plant scheme Graphical presentation of potential planting scheme for 1 ha
Annex 6 - Employment 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 Africa Europe USA fix cost days


Category value
Annual inflation rate costs % 5.7% 2.1% 2.2%
Cost of land (if freehold) USD/ha 100 350 250
Land lease USD/ha 0.10 70 50
Value of land at end of project USD/ha 2500 10000 7500
Land preparation cost USD/ha 40 140 120 20 2
Custodial management cost USD/ha 80 230 200 50 3
Costprice labour USD/day 10 60 50
Custodial management cost USD/ha 100 350 300 50 5
Maintenance cost trees and bushes - year 2-8 USD/ha 200 700 600 100 10
Maintenance cost trees and bushes - from year 9 USD/ha 100 350 300 50 5
Harvesting cost timber - harvest until yr 20 USD/ha 250 750 650 150 10
Harvesting cost timber - harvest from yr 21 USD/ha 210 510 450 150 6
Harvesting cost bushes annual production (fruit/nuts)USD/ha 500 1500 1300 300 20

Portfolio model
Start of planting
Project 1 2011
Project 1 2012
Project 2 2013
Project 3 2014
Project 4 2015
Project 5 2016
Project 6 2017
Project 7 2018
Project 8 2019
Project 9 2020
Project 10 2021
Number of projects 10

Groasis Financial model for a reforestation project Copyright Wout Hoff


e' is interactive with 'input and output'

loyment calculation

er project duration
prices over project duration
ces over project duration

Groasis Financial model for a reforestation project Copyright Wout Hoff


OUTPUT Units 1 Project
Project size ha 50,000
Project duration years 35
Cost of capital % 10%
Tax rate % 20%
Net Present Value (NPV) million USD 1,947
Internal Rate of Return (IRR) % 26.2%
Capital employed million USD (348)
Payback (break even) years 7
Tonnes of CO2 captured over project lifetime million tonnes 17.5
Cost per tonne of CO2 (investment only) USD/tonne 19.90
NPV generated per tonne of CO2 USD/tonne 111.25
Employment generated for 35 years (average) FTE 12,422

Groasis Financial model for a reforestation project Copyright Wout Hoff


INPUT Units Single value
Project dates and currency
Start of planting year 2011
Planting in year 1
Removing of waterboxes in year 2
First bushes (fruit/nuts) harvest in year 5
Last hardwood harvest in year 35
Location of project Africa
Currency USD
Annual inflation rate - costs 5.70%
Cost of capital 10.0%

Investment
Ownership type of land freehold
Cost of land (if freehold) USD/ha 100
Land lease USD/ha/yr 0.10
Number of ha 50,000
Value of land at end of project USD/ha 2,500
Baseline study USD 125,000
Land preparation cost USD/ha 40
Custodial management cost USD/ha 80
Number of trees per ha 2,667
Number of trees planted 133,350,000
of which softwood % 80%
of which hardwood % 20%
Number of bushes per ha 1,333
Number of bushes planted 66,650,000
Number of m2 per tree/bush m2 2.5
Groasis waterbox ownership model lease
Groasis waterbox discount 10%
Groasis waterbox cost USD/box 2.75
Residual value of waterbox % 0%
Residual value of waterbox USD/box 0.00
Number of Groasis waterboxes needed 100,000,000
Planting material trees (sapling/nut/seed) USD/tree 0.20
Planting material bushes (sapling/nut/seed) USD/bush 0.25
Labour needed to plant 1 tree or bush minutes 5
Costprice labour USD/day 10
Costprice labour to plant 1 trees or bush USD/tree or bush 0.10
Energy cost for planting / removing USD/waterbox 0.01
Equipment cost per ha for planting / removing USD/ha 75
Total cost per tree USD/tree 0.33
Total cost per bush USD/bush 0.38
Total cost per ha for trees (trees + planting) USD/ha 888
Total cost per ha for bushes (bushes + planting) USD/ha 510
Carbon - Upfront admin costs (only if carbon = yes) USD 150,000
Carbon - Upfront verification costs (only if carbon = yes) USD 1,050,000

Groasis Financial model for a reforestation project Copyright Wout Hoff


O&M costs (annual cost)
Overhead and management USD/yr 712,500
Custodial management cost USD/ha 100
Maintenance cost trees and bushes - year 2-8 USD/ha 200
Maintenance cost trees and bushes - from year 9 USD/ha 100
Harvesting cost timber - harvest until yr 20 USD/ha 250
Harvesting cost timber - harvest from yr 21 USD/ha 210
Harvesting cost bushes annual production (fruit/nuts) USD/ha 500
Labour needed to remove 1 waterbox minutes 3
Costprice labour to remove 1 waterbox USD/waterbox 0.06
Total cost waterbox removal USD/waterbox 0.07
Total cost waterbox removal per ha USD/ha 145
Unforeseen % 2%
FSC - Admin cost (certificate) USD 25,000
FSC - Project lifetime admin and control costs USD 10,000
Carbon - Project lifetime admin costs (only if carbon = yes)USD/ha 2.0
Carbon - Project lifetime control costs (only if carbon = yes)
USD/ha 4.0

Harvest from trees and bushes


Survival rate trees - after planting % 90%
Survival rate trees - after first harvest % 95%
Survival rate trees - after second harvest % 95%
Amount of timber not harvested due to death of trees % 14.4%
Hardwood - Timber price in year of planting USD/m3 400
Softwood - Timber price in year of planting USD/m3 150
Price discount of timber of interim harvest 1 and 2 % 50%
Indexation of timber prices - annual 1.0%
First interim timber harvest in year 10
Amount of trees harvested in first harvest % of trees 36%
Timber production per tree in first harvest m3 0.30
Second interim timber harvest in year 20
Amount of trees harvested in second harvest % of trees 17%
Timber production per tree in second harvest m3 0.70
Third interim timber harvest in year 25
Amount of trees harvested in third harvest % of trees 16%
Timber production per tree in third harvest m3 1.00
Last timber harvest in year 35
Amount of timber remaining for last harvest % of trees 16%
Timber production per tree in last harvest m3 1.00
First bushes harvest (fruit/nuts) in year 5
Annual production per bush after first harvest kg 2.00
Increase of production per bush after first harvest % per year 3.0%
Price of product harvested from bushes (at planting) USD/kg 1.00
Indexation of bushes harvest prices - annual 3.0%

Carbon Credits (CDM / VER)


Carbon credits included yes
Start of Carbon credits revenue year 2
CO2 absorption per year tonnes/ha 10
1carbon credit t of CO2 1
Carbon credit price USD 4.00
Indexation of carbon prices % 5%
Amount of credits that can be sold % 80%

Groasis Financial model for a reforestation project Copyright Wout Hoff


Financial structure NOT INCLUDED
Equity 30.0%
Debt 60.0%
Government grant 10.0%
Principal (size of loan) USD
Tenor (loan duration) 25
Grace period (how many years free of repayment) 1
Debt cost (fixed rate)
Arrangement and committment fees 1.0%
Book depreciation, years 10
Equity investment USD
Cost of capital 7.0%
Size of grant USD

Tax
Corporate tax 20.0%

Depreciation NOT INCLUDED


Depreciation method linear
Depreciation years 10
Annual depreciation USD

OUTPUT - DETAIL Units Single value


Employment
In year 1
Baseline study hr 1,280
Land preparation hr 800,000
Custodial management hr 1,200,000
Planting hr 41,666,667
Carbon - Upfront admin and verification costs hr 4,800

Over project lifetime (yr 2 - 35)


Overhead and management hr 8,800
Custodial management hr 70,000,000
Waterbox removal hr 25,000,000
Maintenance - year 2-8 hr 28,000,000
Maintenance - year 8 onwards hr 54,000,000
Harvesting of bushes (fruit/nuts) hr 240,000,000
Harvesting of trees (timber) - first interim harvest hr 1,440,000
Harvesting of trees (timber) - second interim harvest hr 684,000
Harvesting of trees (timber) - third interim harvest hr 389,880
Harvesting of trees (timber) - final harvest hr 389,880
FSC - Project lifetime admin and control hr 4,000
Carbon - Project lifetime admin and control hr 163,200

Secondary employment generated (waterboxes, hr 231,876,253


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

lifetime hr 695,628,760
average FTE/yr for 35 years FTE 12,422

Groasis Financial model for a reforestation project Copyright Wout Hoff


year of operation 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Units Total 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Cash flow

Investment costs
Cost of land - freehold kUSD (5,000) (5,000)
Baseline study kUSD (132) (132)
Land preparation kUSD (2,114) (2,114)
Custodial management kUSD (4,228) (4,228)
Waterbox costs for trees kUSD (174,427) (174,427)
Waterbox costs for bushes kUSD (87,181) (87,181)
Planting costs trees kUSD (46,925) (46,925)
Planting costs bushes kUSD (26,976) (26,976)
Carbon - Upfront admin (only if CDM =kUSD
yes) (159) (159)
Carbon - Upfront control (only if CDM =
kUSD
yes) (1,110) (1,110)

Total investment costs kUSD (348,251) (348,251) - - - - - - - - - - - - - - - - -

O&M costs
Land lease - leasehold kUSD - - - - - - - - - - - - - - - - - - -
Overhead and management kUSD (78,750) (753) (796) (841) (889) (940) (994) (1,050) (1,110) (1,173) (1,240) (1,311) (1,386) (1,465) (1,548) (1,636) (1,730) (1,828) (1,933)
Custodial management kUSD (547,345) - (5,586) (5,905) (6,241) (6,597) (6,973) (7,370) (7,791) (8,235) (8,704) (9,200) (9,725) (10,279) (10,865) (11,484) (12,139) (12,831) (13,562)
Maintenance year 2-8 kUSD (92,926) - (11,172) (11,809) (12,482) (13,194) (13,946) (14,741) (15,581) - - - - - - - - - -
Maintenance from year 9 kUSD (500,882) - - - - - - - - (8,235) (8,704) (9,200) (9,725) (10,279) (10,865) (11,484) (12,139) (12,831) (13,562)
Removal of waterboxes kUSD (8,100) - (8,100) - - - - - - - - - - - - - - - -
Trees - first partial harvest kUSD (7,834) - - - - - - - - - (7,834) - - - - - - - -
Trees - second partial harvest kUSD (6,477) - - - - - - - - - - - - - - - - - -
Trees - third partial harvest kUSD (6,820) - - - - - - - - - - - - - - - - - -
Trees - final harvest kUSD (11,872) - - - - - - - - - - - - - - - - - -
Bushes - annual harvesting kUSD (2,648,063) - - - - (32,985) (34,865) (36,852) (38,953) (41,173) (43,520) (46,001) (48,623) (51,394) (54,324) (57,420) (60,693) (64,153) (67,809)
Unforeseen kUSD (78,181) (15) (513) (371) (392) (1,074) (1,136) (1,200) (1,269) (1,176) (1,400) (1,314) (1,389) (1,468) (1,552) (1,640) (1,734) (1,833) (1,937)
FSC - Admin in year before first harvestkUSD (41) - - - - - - - - (41) - - - - - - - - -
FSC - Project lifetime admin and controlkUSD
costs (985) - - - - - - - - - (17) (18) (19) (21) (22) (23) (24) (26) (27)
Carbon - Project lifetime admin costs (only
kUSDif CDM = yes)
(11,053) (106) (112) (118) (125) (132) (139) (147) (156) (165) (174) (184) (194) (206) (217) (230) (243) (257) (271)
Carbon - Project lifetime control costs kUSD
(only if CDM = yes)
(22,105) (211) (223) (236) (250) (264) (279) (295) (312) (329) (348) (368) (389) (411) (435) (459) (486) (513) (542)

Total O&M costs kUSD (4,021,435) (1,085) (26,503) (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 kUSD 125,000 - - - - - - - - - - - - - - - - - -
Waterboxes residual value kUSD - - - - - - - - - - - - - - - - - - -
Trees - first interim harvest kUSD 1,193,141 - - - - - - - - - 1,193,141 - - - - - - - -
Trees - second interim harvest kUSD 1,460,750 - - - - - - - - - - - - - - - - - -
Trees - third interim harvest kUSD 4,167,142 - - - - - - - - - - - - - - - - - -
Trees - final harvest kUSD 12,274,980 - - - - - - - - - - - - - - - - - -
Bushes - annual harvest kUSD 13,722,358 - - - - 159,167 168,860 179,144 190,054 201,628 213,907 226,934 240,755 255,417 270,971 287,474 304,981 323,554 343,259
Carbon credits income kUSD 150,058 - 1,764 1,852 1,945 2,042 2,144 2,251 2,364 2,482 2,606 2,737 2,873 3,017 3,168 3,326 3,493 3,667 3,851

Total income kUSD 33,093,430 - 1,764 1,852 1,945 161,209 171,005 181,395 192,418 204,110 1,409,655 229,671 243,628 258,434 274,139 290,800 308,473 327,221 347,109

Tax

Earnings before tax kUSD 13,263,120 (349,336) (24,739) (17,429) (18,435) 106,023 112,673 119,739 127,247 143,583 1,337,713 162,074 172,178 182,911 194,312 206,423 219,287 232,951 247,465
Tax loss carry forward kUSD (2,091,517) - (349,336) (374,075) (391,504) (409,939) (303,916) (191,243) (71,504) - - - - - - - - - -
Taxable income kUSD 11,171,602 (349,336) (374,075) (391,504) (409,939) (303,916) (191,243) (71,504) 55,743 143,583 1,337,713 162,074 172,178 182,911 194,312 206,423 219,287 232,951 247,465
Total Tax kUSD (2,652,624) - - - - - - - (11,149) (28,717) (267,543) (32,415) (34,436) (36,582) (38,862) (41,285) (43,857) (46,590) (49,493)

Free cash flow 10,610,496 (349,336) (24,739) (17,429) (18,435) 106,023 112,673 119,739 116,098 114,866 1,070,170 129,659 137,743 146,329 155,450 165,138 175,429 186,361 197,972
Discounted FCF 1,488,634 (317,578) (20,446) (13,094) (12,591) 65,832 63,601 61,445 54,161 48,715 412,597 45,445 43,889 42,386 40,935 39,533 38,179 36,870 35,607
Cumulative FCF (not discounted) 98,447,548 (349,336) (374,075) (391,504) (409,939) (303,916) (191,243) (71,504) 44,594 159,461 1,229,631 1,359,290 1,497,033 1,643,362 1,798,812 1,963,950 2,139,379 2,325,740 2,523,712

NPV 1,946,870
IRR 26.2%

Capital employed (348,251)

Payback 7

Groasis Financial model for a reforestation project Copyright Wout Hoff


19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045

- - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - -
(2,043) (2,159) (2,282) (2,412) (2,550) (2,695) (2,849) (3,011) (3,183) (3,364) (3,556) (3,759) (3,973) (4,199) (4,439) (4,692) (4,959)
(14,335) (15,152) (16,016) (16,929) (17,893) (18,913) (19,991) (21,131) (22,335) (23,609) (24,954) (26,377) (27,880) (29,469) (31,149) (32,925) (34,801)
- - - - - - - - - - - - - - - - -
(14,335) (15,152) (16,016) (16,929) (17,893) (18,913) (19,991) (21,131) (22,335) (23,609) (24,954) (26,377) (27,880) (29,469) (31,149) (32,925) (34,801)
- - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - -
- (6,477) - - - - - - - - - - - - - - -
- - - - - - (6,820) - - - - - - - - - -
- - - - - - - - - - - - - - - - (11,872)
(71,675) (75,760) (80,078) (84,643) (89,467) (94,567) (99,957) (105,655) (111,677) (118,043) (124,771) (131,883) (139,401) (147,346) (155,745) (164,623) (174,006)
(2,048) (2,294) (2,288) (2,418) (2,556) (2,702) (2,992) (3,019) (3,191) (3,372) (3,565) (3,768) (3,983) (4,210) (4,450) (4,703) (5,209)
- - - - - - - - - - - - - - - - -
(29) (30) (32) (34) (36) (38) (40) (42) (45) (47) (50) (53) (56) (59) (62) (66) (70)
(287) (303) (320) (339) (358) (378) (400) (423) (447) (472) (499) (528) (558) (589) (623) (658) (696)
(573) (606) (641) (677) (716) (757) (800) (845) (893) (944) (998) (1,055) (1,115) (1,179) (1,246) (1,317) (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)

- - - - - - - - - - - - - - - - 125,000
- - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - -
- 1,460,750 - - - - - - - - - - - - - - -
- - - - - - 4,167,142 - - - - - - - - - -
- - - - - - - - - - - - - - - - 12,274,980
364,163 386,341 409,869 434,830 461,311 489,405 519,209 550,829 584,375 619,963 657,719 697,774 740,268 785,351 833,179 883,919 937,750
4,043 4,245 4,458 4,680 4,914 5,160 5,418 5,689 5,974 6,272 6,586 6,915 7,261 7,624 8,005 8,405 8,826

368,206 1,851,336 414,326 439,510 466,225 494,565 ### 556,518 590,348 626,235 664,305 704,689 747,529 792,975 841,184 892,324 ###

262,883 1,733,402 296,654 315,130 334,756 355,601 4,537,929 401,262 426,242 452,775 480,957 510,891 542,684 576,453 612,321 650,416 13,078,749
- - - - - - - - - - - - - - - - -
262,883 1,733,402 296,654 315,130 334,756 355,601 4,537,929 401,262 426,242 452,775 480,957 510,891 542,684 576,453 612,321 650,416 13,078,749
(52,577) (346,680) (59,331) (63,026) (66,951) (71,120) (907,586) (80,252) (85,248) (90,555) (96,191) (102,178) (108,537) (115,291) (122,464) (130,083) ###

210,306 1,386,721 237,323 252,104 267,804 284,481 ### 321,009 340,993 362,220 384,766 408,712 434,147 461,163 489,857 520,333 ###
34,387 206,127 32,070 30,970 29,908 28,882 335,066 26,934 26,010 25,118 24,255 23,423 22,619 21,842 21,092 20,367 372,316
2,734,018 4,120,739 ### ### ### ### ### ### ### ### ### ### ### ### ### ### ###

Groasis Financial model for a reforestation project Copyright Wout Hoff


year of portfolio 1 2 3 4 5 6
FCF Units Total 2011 2012 2013 2014 2015 2016
Waterbox investment kUSD (261,608) (261,608)
Project 1 kUSD 28,985,352 (87,729) (24,739) (17,429) (18,435) 106,023 112,673
Project 2 kUSD 28,985,352 (87,729) (24,739) (17,429) (18,435) 106,023
Project 3 kUSD 28,985,352 - (87,729) (24,739) (17,429) (18,435)
Project 4 kUSD 28,985,352 - - (87,729) (24,739) (17,429)
Project 5 kUSD 28,985,352 - - - (87,729) (24,739)
Project 6 kUSD 28,985,352 - - - - (87,729)
Project 7 kUSD 28,985,352 - - - - -
Project 8 kUSD 28,985,352 - - - - -
Project 9 kUSD 28,985,352 - - - - -
Project 10 kUSD 28,985,352 - - - - -
Total EBIT kUSD ### (349,336) (112,468) (129,897) (148,332) (42,308) 70,365

Tax loss carry forward kUSD (4,363,584) (349,336) (461,804) (591,701) (740,032) (782,341)
Taxable income kUSD ### (349,336) (461,804) (591,701) (740,032) (782,341) (711,976)
Total Tax kUSD (57,918,382) - - - - - -

Free cash flow kUSD ### (349,336) (112,468) (129,897) (148,332) (42,308) 70,365
Discounted FCF kUSD 14,390,464 (317,578) (92,949) (97,593) (101,312) (26,270) 39,719
Cumulative FCF (notkUSD
disc) ### (349,336) (461,804) (591,701) (740,032) (782,341) (711,976)

NPV ###

IRR 35.9%

Capital employed ###

Payback 8
7 8 9 10 11 12 13 14 15 16
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

119,739 127,247 143,583 1,337,713 162,074 172,178 182,911 194,312 206,423 219,287
112,673 119,739 127,247 143,583 1,337,713 162,074 172,178 182,911 194,312 206,423
106,023 112,673 119,739 127,247 143,583 1,337,713 162,074 172,178 182,911 194,312
(18,435) 106,023 112,673 119,739 127,247 143,583 1,337,713 162,074 172,178 182,911
(17,429) (18,435) 106,023 112,673 119,739 127,247 143,583 1,337,713 162,074 172,178
(24,739) (17,429) (18,435) 106,023 112,673 119,739 127,247 143,583 1,337,713 162,074
(87,729) (24,739) (17,429) (18,435) 106,023 112,673 119,739 127,247 143,583 1,337,713
- (87,729) (24,739) (17,429) (18,435) 106,023 112,673 119,739 127,247 143,583
- - (87,729) (24,739) (17,429) (18,435) 106,023 112,673 119,739 127,247
- - - (87,729) (24,739) (17,429) (18,435) 106,023 112,673 119,739
190,104 317,350 460,933 1,798,646 2,048,449 2,245,367 2,445,706 2,658,454 2,758,853 2,865,467

(711,976) (521,872) (204,522) - - - - - - -


(521,872) (204,522) 256,411 1,798,646 2,048,449 2,245,367 2,445,706 2,658,454 2,758,853 2,865,467
- - (51,282) (359,729) (409,690) (449,073) (489,141) (531,691) (551,771) (573,093)

190,104 317,350 409,651 1,438,917 1,638,759 1,796,293 1,956,565 2,126,763 2,207,082 2,292,373
97,553 148,046 173,732 554,765 574,375 572,354 566,747 560,043 528,358 498,887
(521,872) (204,522) 205,129 1,644,046 3,282,805 5,079,099 7,035,664 9,162,427 ### ###
17 18 19 20 21 22 23 24 25 26
2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

232,951 247,465 262,883 1,733,402 296,654 315,130 334,756 355,601 4,537,929 401,262
219,287 232,951 247,465 262,883 1,733,402 296,654 315,130 334,756 355,601 4,537,929
206,423 219,287 232,951 247,465 262,883 1,733,402 296,654 315,130 334,756 355,601
194,312 206,423 219,287 232,951 247,465 262,883 1,733,402 296,654 315,130 334,756
182,911 194,312 206,423 219,287 232,951 247,465 262,883 1,733,402 296,654 315,130
172,178 182,911 194,312 206,423 219,287 232,951 247,465 262,883 1,733,402 296,654
162,074 172,178 182,911 194,312 206,423 219,287 232,951 247,465 262,883 1,733,402
1,337,713 162,074 172,178 182,911 194,312 206,423 219,287 232,951 247,465 262,883
143,583 1,337,713 162,074 172,178 182,911 194,312 206,423 219,287 232,951 247,465
127,247 143,583 1,337,713 162,074 172,178 182,911 194,312 206,423 219,287 232,951
2,978,679 3,098,897 3,218,197 3,613,886 3,748,465 3,891,417 4,043,261 4,204,550 8,536,057 8,718,032

- - - - - - - - - -
2,978,679 3,098,897 3,218,197 3,613,886 3,748,465 3,891,417 4,043,261 4,204,550 8,536,057 8,718,032
(595,736) (619,779) (643,639) (722,777) (749,693) (778,283) (808,652) (840,910) ### ###

2,382,943 2,479,118 2,574,557 2,891,108 2,998,772 3,113,133 3,234,609 3,363,640 6,828,845 6,974,425
471,453 445,891 420,961 429,745 405,226 382,436 361,235 341,496 630,275 585,192
### ### ### ### ### ### ### ### ### ###
27 28 29 30 31 32 33 34 35 36
2037 2038 2039 2040 2041 2042 2043 2044 2045 2046

426,242 452,775 480,957 510,891 542,684 576,453 612,321 650,416 ### -


401,262 426,242 452,775 480,957 510,891 542,684 576,453 612,321 650,416 ###
4,537,929 401,262 426,242 452,775 480,957 510,891 542,684 576,453 612,321 650,416
355,601 4,537,929 401,262 426,242 452,775 480,957 510,891 542,684 576,453 612,321
334,756 355,601 4,537,929 401,262 426,242 452,775 480,957 510,891 542,684 576,453
315,130 334,756 355,601 4,537,929 401,262 426,242 452,775 480,957 510,891 542,684
296,654 315,130 334,756 355,601 4,537,929 401,262 426,242 452,775 480,957 510,891
1,733,402 296,654 315,130 334,756 355,601 4,537,929 401,262 426,242 452,775 480,957
262,883 1,733,402 296,654 315,130 334,756 355,601 4,537,929 401,262 426,242 452,775
247,465 262,883 1,733,402 296,654 315,130 334,756 355,601 4,537,929 401,262 426,242
8,911,323 9,116,632 9,334,707 8,112,196 8,358,226 8,619,550 8,897,115 9,191,930 ### ###

- - - - - - - - - -
8,911,323 9,116,632 9,334,707 8,112,196 8,358,226 8,619,550 8,897,115 9,191,930 ### ###
### ### ### ### ### ### ### ### ### ###

7,129,058 7,293,306 7,467,765 6,489,756 6,686,581 6,895,640 7,117,692 7,353,544 ### ###
543,788 505,742 470,764 371,919 348,362 326,594 306,465 287,836 504,803 448,528
### ### ### ### ### ### ### ### ### ###
37 38 39 40 41 42 43 44 45
2047 2048 2049 2050 2051 2052 2053 2054 2055 0

- - - -
- - - - - - - - - -
### - - - - - - - - -
650,416 ### - - - - - - - -
612,321 650,416 ### - - - - - - -
576,453 612,321 650,416 ### - - - - - -
542,684 576,453 612,321 650,416 ### - - - - -
510,891 542,684 576,453 612,321 650,416 ### - - - -
480,957 510,891 542,684 576,453 612,321 650,416 ### - - -
452,775 480,957 510,891 542,684 576,453 612,321 650,416 ### - -
### ### ### ### ### ### ### ### 0 0

- - - - - - - - - -
### ### ### ### ### ### ### ### - -
### ### ### ### ### ### ### ### - -

### ### ### ### ### ### ### ### - -


397,724 351,884 310,543 273,281 239,717 209,504 182,326 157,899 - -
### ### ### ### ### ### ### ### ### ###
0 0 0 0 0 0 0 0 0 0

- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
0 0 0 0 0 0 0 0 0 0

- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -

- - - - - - - - - -
- - - - - - - - - -
### ### ### ### ### ### ### ### ### ###
0 0

0 0

- -
- -
- -

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

Scenario 1 - Biomass at harvest

Conservative Base case Optimistic


Timber production harvest 1 (m3/tree) 0.15 0.30 0.45
Timber production harvest 2 (m3/tree) 0.30 0.70 1.10
Timber production harvest 3 (m3/tree) 0.50 1.00 1.50
Timber production last harvest (m3/tree) 0.50 1.00 1.50
Net Present Value (NPV) kUSD 785,266 1,946,870 2,008,916
Internal Rate of Return (IRR) % 18.9% 26.2% 25.2%

Scenario 2 - Development of timber prices

Conservative Base case Optimistic


Indexation of timber prices - annual 0% 1% 2%
Price of softwood, year 25 (USD/m3) 150 192.36 246.09
Price of hardwood, year 35 (USD/m3) 400 566.64 799.96
Net Present Value (NPV) kUSD 1,160,364 1,946,870 1,702,843
Internal Rate of Return (IRR) % 21.6% 26.2% 23.3%

Scenario 3 - Survival rate of trees

Conservative Base case Optimistic


Survival rate trees - after planting 60% 90% 98%
Survival rate trees - after first harvest 60% 95% 98%
Survival rate trees - after second harvest 60% 95% 98%
Net Present Value (NPV) kUSD 693,387 1,946,870 1,155,080
Internal Rate of Return (IRR) % 19.3% 26.2% 23.1%

Scenario 4 - Annual bushes harvest

Conservative Base case OptimisticNo bushes planted


Production in year of first harvest (kg) 1.00 2.00 3.00
Annual production increase 1% 3% 5% assumes no bushes
Price of product in year 1 (USD/kg) 0.50 1.00 1.00 planted, no harvest
Indexation of product prices 1% 3% 3%
Net Present Value (NPV) kUSD 637,373 1,946,870 3,389,863 823,824
Internal Rate of Return (IRR) % 15.8% 26.2% 32.5% 18.8%
Manpower required during project FTE 12,422 12,422 12,422 5,398

Scenario 5 - Development of carbon credit prices

Conservative Base case Optimistic


Start price (USD/credit) 2.00 4.00 6.00
Indexation of carbon credit prices - annual 2% 5% 6%
Price in year 25 (USD/credit) 3.28 13.55 25.75
Net Present Value (NPV) kUSD 1,933,230 1,946,870 3,404,776
Internal Rate of Return (IRR) % 26.0% 26.2% 32.7%

Scenario 6 - Labour cost

Conservative Base case Optimistic


Costprice labour (USD/day) 5 10 40
Net Present Value (NPV) kUSD 2,064,115 1,946,870 1,236,978
Internal Rate of Return (IRR) % 27.7% 26.2% 18.6%

Scenario 7 - Changes required to get NPV = 0

scenario a) Base case Changes to


Costprice labour (USD/day) 10 90
or
scenario b) the values to the
Survival rate trees - after planting 90% left need to be 60%
amended to the
Survival rate trees - after first harvest 95% 60%
values in the
Survival rate trees - after second harvest 95% 60%
column to the right
Production in year of first harvest (kg) 2.00 to get NPV = 0 1.96
Annual production increase 3.0% 2.0%
Price of product in year 1 (USD/kg) 1.00 0.75
Indexation of product prices 3.0% 2.0%

Groasis Financial model for a reforestation project Copyright Wout Hoff


605.00

505.00

405.00
Price (USD/m3)

305.00

205.00

105.00

5.00
25

35
11

13

15

17

19

21

23

27

29

31

33

37

39

41

43

45
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
hardwood timber price softwood timber price
(USD/m3) (USD/m3) Year
Price (USD/kg)

-
20

0.50
1.00
1.50
2.00
2.50
3.00
11
20
13
20
15
20
17
20
19
20
21
20
23
20

(USD/kg)
25
20
27

Year
bushes harvest price
20
29
20
31
20
33
20
35
20
37
20
39
20
41
20
43
20
45
Price (USD/credit)

-
20

5.00
10.00
15.00
20.00
25.00

11

20
14

20
17

20
20

20
23

(USD/credit)
20

Carbon credit prices


26

Year
20
29

20
32

20
35

20
38

20
41

20
44
Cumulative FCF (kUSD)

10,000,000
15,000,000
20,000,000
25,000,000

-
5,000,000

(5,000,000)
2011

2012

2013

2014

2015

2016

2017

2018

2019
in 2019

2020
Break even

2021

2022

2023

2024
Row 62

2025

2026
Year

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045
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 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 99 100 101 102 103 104 105
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


Employment generated (FTE) over project lifetime
16,000

14,000

12,000

10,000

8,000

6,000

4,000
Baseline study Land preparation Planting Overhead and
management
Custodial management Waterbox removal Maintenance - year 2-8 Maintenance - year 8
onwards
2,000
Harvesting of bushes Harvesting of trees Harvesting of trees Harvesting of trees
(fruit/nuts) (timber) - first interim (timber) - second interim (timber) - third interim
harvest harvest harvest
Harvesting of trees FSC - Admin and control Carbon - Admin,
- - final harvest
(timber) verification and control
17

25

27

33

35

41

43
11

13

15

19

21

23

29

31

37

39

45
Secondary employment
20

20

20

20

20

20

20

20

20
20

20

20

20

20

20

20

20

20
generated

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