EVALUATION OF PROFITABILITY OF PINE WOOD UNDER REAL OPTIONS IN NORTHERN SIERRA OF OAXACA, MÉXICO

Abstract

A profitability analysis of pine wood was carried out in Ixtlán de Juárez, Oaxaca, México, where forest exploitation is solely timber-yielding,
and is done exclusively through the harvest of trees of various pine species, through exploitation systems of whole shafts and short wood.
The wood is classified at street level according to lengths, qualities, and is transported to the communal property sawmill. Economic
information was gathered to calculate the financial indicators and to determine the profitability of the pine wood exploitation through the
traditional approach: Net Present Value (NPV) and Internal Rate of Return (IRR), complemented by the real options approach using the
Back Scholes method, considering an option of abandonment and an option of expansion. Through the evaluation of projects by the
traditional method, NPV>0, IRR=34 % and benefit-cost relation=1.04 were obtained. These indicators show that the enterprise has a positive
financial profitability. The methodology of real options indicates that the option of abandonment is less profitable compared to the option
of expansion, based on the results obtained, with a difference of $14, 556,250 MX pesos ($18.90/USD).