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Screenshots of multi-species financial models and explanatory notes
Book chapter

Screenshots of multi-species financial models and explanatory notes

Steve R Harrison and Robert Harrison
Promoting sustainable agriculture and agroforestry to replace unproductive land use in Fiji and Vanuatu, pp.117-146
ACIAR Monograph, MN191, Australian Centre for International Agricultural Research
2016
url
https://aciar.gov.au/View
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Abstract

Forestry Sciences
This working paper provides screenshots of the financial models of the five mixed-species agroforestry (MSA) models selected and described in Working Paper 8, together with notes to explain the structure and interpretation of these models. The Microsoft Excel workbook for each MSA system consists of a set of spreadsheets, including a first or summary sheet and a sheet for each individual species module. For each MSA system, the summary sheet contains the key parameter values of the system, and these are referenced by the spreadsheets for individual species. Conversely, the summary sheet for each system references the cash flow sequences for each individual species module to compile a summary of financial performance for the overall agroforestry system. Each species module is for a standard area unit of 1 ha, and all use a discount rate of 8%. Estimates of annual capital outlays, operating costs and revenue generated are presented for each individual species, to derive the annual net cash flows. Annual labour requirements are also estimated. The currency units are those for the country to which the MSA is best suited (Fiji dollars or Vanuatu vatu). In the summary sheet, the overall net present value (NPV) is computed for each species mixture. Sensitivity analysis, breakeven analysis and scenario analysis (where optimistic or pessimistic values for all parameters are considered simultaneously) are demonstrated. Notably, these have not been performed for individual tree and crop species, the financial analyses being designed to evaluate overall agroforestry systems, not individual components of them. Because the overall rotation length varies between MSA systems, the financial performance of all systems is compared on the basis of site value or land expectation value (LEV) (the sum of NPVs for a perpetual rotation). It is found that given the parameter values and other assumptions of the analyses, all the selected species mixtures would generate positive returns. NPV estimates per hectare for the five MSA systems in local currencies (Fiji dollars and Vanuatu Vatu) and Australian dollars are summarised in the following table. MSA species mixtures 2, 4 and 5 have very similar LEVs, considerably lower than those for mixtures 1 (dominated by mango) and 3 (dominated by sandalwood).

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