4.2.2 Forest management by tender

processes from stand to timber raw materials; and [j] is the types of costs. Resolving

i!1

The ex ante budget is the tool that foresters usually adopt, where in one site is reported the revenue and in the other site the expenditures. The balance between revenues and expenditures is the stumpage value that LCs take from the commit-

The common model of this forest management is based on the ability of forest property (public or private) to carry out the forestry intervention. The owner directly or through an agency of the same subsidiary carries out forest utilization using personnel, machines, and tools in its possession. The economic and financial

MPTRMi !

� <sup>X</sup><sup>m</sup> j!1

" # !

KTotj

for the stumpage value, it becomes

Timber Buildings and Sustainability

Pathway of timber productions and value formation.

Figure 4.

Figure 5.

92

SV <sup>¼</sup> MPTRM � KTot <sup>½</sup> � ¼ <sup>X</sup><sup>n</sup>

ment to pay at the FLOs when agreement was signed.

questions that accompany this approach are as follows:

• What is its operating cost (KOp)?

timber production at lowest price. Source: Our elaboration.

• What is the total cost of carrying out the intervention (Ktot)?

• What is the market value of the timber raw material (MVTRM)?

Services market: forest land owner purchase logging company service for felling, extraction, and processing

4.2 Appraisal approach for entrusting types

4.2.1 Forest management in house

In this case, the silvicultural intervention is entrusted to an LC, which provides a service to the FLOs in exchange for payment of the service. The company that carries out the intervention is the one that, all other parameters being equal, ensures the service at the lowest price (Figure 5).



A B C D E E explosed G 1 Types of data Description Range Units Amounts Formulas Sources

Operative Machinery Costs Analysis within Forest Management Implementation Frame

hours

8 Gasoline price €/l 1.25 Market

9 Lubricant price €/l 2.25 Market

10 Discount rate % 3.00% Market

15 Working days hours 8.00 Technical

17 Power kW 60.00 Technical

18 Tire duration hours 3000.00 Technical

0.70– 0.85

950– 850

280– 300

> 2–4 g/ kWh

g/ kWh

Market price € 45,000.00 Market

% 10.00% Technical

€ 4500.00 =E2 E3 Our

€ 4050.00 =(E2 E4)/E11 Our

€ 2000.00 Market

year 10.00 Technical

hours 1000.00 Technical

hours 10,000.00 Technical

days 250.00 Technical

hours 4.20 Technical

0.84 Technical

0.95 Technical

300.00 Technical

4.00 Technical

14.00 Market

survey

documents

elaboration

elaboration

survey

survey

survey

survey

survey

documents

documents

documents

documents

documents

documents

documents

documents

documents

documents

documents

documents

2 Economic data

11 Technical data

19 Coefficients and parameters

95

12 Annual

13 Technical

14 Work days in

16 Hours machine

20 Oil conversion

21 Gasoline

22 Oil specific

3 Percentuale di

DOI: http://dx.doi.org/10.5772/intechopen.87572

4 Value at the

5 Annual

7 Tire market

recupero

end of the career

amortization

price

Economic duration

machine usage hours

duration

the year

usage effectively

Gasoline conversion coefficient (1 L = 0.84 Kg)

coefficient (1 L = 0.95 kg)

specific consumption

consumption

6 Labor cost €/

#### Table 12.

Cost machines using the FAO frame.


Operative Machinery Costs Analysis within Forest Management Implementation Frame DOI: http://dx.doi.org/10.5772/intechopen.87572

A B C D E E formula G

6.15 =(E20 E15 E22)/ E19

% 60.00% Technical

1.20 Technical

0.84 Technical

0.17 Technical

0.38 Technical

% 10.00% Technical

% 100.00% Technical

% 7.00% Technical

4.05 =E5/E11 Our

0.81 =E9 E8/E11 Our

1.89 =E9 E24/E11 Our

6.75 =E25 + E26 + E27 Our

4.05 =E5/E11 E23 Our

6.89 =E17 E7 Our

0.69 =E30 E21 Our

0.80 =E19 E6/E16 Our

12.43 =E29 + E30 + E31 + E32 Our

19.18 =E28 + E33 Our

Our elaboration

documents

documents

documents

documents

documents

documents

documents

documents

elaboration

elaboration

elaboration

elaboration

elaboration

elaboration

elaboration

elaboration

elaboration

elaboration

l/ hour

17 Gasoline

Timber Buildings and Sustainability

19 Tires

20 Gasoline

21 Gasoline

22 Lubricants

24 Maintenance

25 Variable

26 Fixed costs Annual

27 Interests per

28 Variable

29 Total fixed

31 Gasoline cost

32 Lubricant cost

33 Tires cost per

34 Total variable

35 Total costs Total machine

Source: our elaboration on frame [4, 5].

Cost machines using the FAO frame.

Table 12.

94

30 Variable costs

18 Coefficients and parameters

consumption duration per hours

Average annual investment coefficient

coefficient

conversion coefficient (1 l = 0.84 kg)

consumption

consumption

coefficient

expenditures coefficient

amortization per hour

hours

expenses

costs

Maintenance and repair costs per hour

per hour

per hour

hour

costs

costs

23 Load factor 0.38–

0.70– 0.85

0.70

100– 30%

> 15– 5%

> > €/ hours

> > €/ hours

> > €/ hours

€/ hours

€/ hours

€/ hours

€/ hours

€/ hours

€/ hours

€/ hours


• Some algorithms and parameters used for evaluating cost are not easy to

Commodities market: forest land owner sells its stand to the logging company that makes the highest price.

Operative Machinery Costs Analysis within Forest Management Implementation Frame

In the forest appraisals, the approach is to elaborate an ex ante budget of the

The differences between expected revenue and costs are the expected stumpage value of the trees that LCs should pay to the FLO to bay the stand, while only the amount of the expected costs is the price that FLO has to pay to the LC for the service of felling the stand. Stumpage price became the minimum price that FLO accepts to sell its stand. LCs that want to purchase it have to submit a proposal with

Growing awareness of the usefulness of forest ecosystems makes the operational cost significant as a component of the wider transformation cost. The latter includes both transaction costs in order to satisfy the provisions dictated by the legislative and regulatory forest and related forest disciplines, as well as the overhead costs

A drawback instead overcomes the analytical approach, whose strong point is its adaptation to the context of intervention and to the specificities of the transformation cycle. This makes it possible to overcome the deformities that characterize forests, especially in the mountain areas, where it is possible to register a different stumpage value for two similar forests, close to each other and having the same

Approaches introduced by international institutions lend themselves to an assessment, very approximate of the costs of managing uniform forests that cover large and flat areas. Their limits are given by concentrating on the component of operating costs, excluding overhead and transaction costs, as well as the introduction of simplifications in order to increase the territorial scale of application. They

determine an underestimation of forest management costs [22].

silvicultural intervention including the expected costs to transform trees in marketable products and the expected revenue that should be obtained from the

understanding the economic ratio.

DOI: http://dx.doi.org/10.5772/intechopen.87572

a price higher than the minimum (Figure 6).

that allow the correct functioning of the LCs.

4.2.3 Forest management by sale of stand

products sold.

Figure 6.

5. Conclusions

97

#### Table 13.

Cost machine per hour, using the USDA frame.

Different approaches to calculate operating costs are reported in the cost machine literature. The main frames are elaborated and reported in Tables 12 and 13, respectively, for FAO and USDA. The following are the common comments:


Operative Machinery Costs Analysis within Forest Management Implementation Frame DOI: http://dx.doi.org/10.5772/intechopen.87572

Figure 6. Commodities market: forest land owner sells its stand to the logging company that makes the highest price.

• Some algorithms and parameters used for evaluating cost are not easy to understanding the economic ratio.

#### 4.2.3 Forest management by sale of stand

In the forest appraisals, the approach is to elaborate an ex ante budget of the silvicultural intervention including the expected costs to transform trees in marketable products and the expected revenue that should be obtained from the products sold.

The differences between expected revenue and costs are the expected stumpage value of the trees that LCs should pay to the FLO to bay the stand, while only the amount of the expected costs is the price that FLO has to pay to the LC for the service of felling the stand. Stumpage price became the minimum price that FLO accepts to sell its stand. LCs that want to purchase it have to submit a proposal with a price higher than the minimum (Figure 6).

#### 5. Conclusions

Growing awareness of the usefulness of forest ecosystems makes the operational cost significant as a component of the wider transformation cost. The latter includes both transaction costs in order to satisfy the provisions dictated by the legislative and regulatory forest and related forest disciplines, as well as the overhead costs that allow the correct functioning of the LCs.

Approaches introduced by international institutions lend themselves to an assessment, very approximate of the costs of managing uniform forests that cover large and flat areas. Their limits are given by concentrating on the component of operating costs, excluding overhead and transaction costs, as well as the introduction of simplifications in order to increase the territorial scale of application. They determine an underestimation of forest management costs [22].

A drawback instead overcomes the analytical approach, whose strong point is its adaptation to the context of intervention and to the specificities of the transformation cycle. This makes it possible to overcome the deformities that characterize forests, especially in the mountain areas, where it is possible to register a different stumpage value for two similar forests, close to each other and having the same

Different approaches to calculate operating costs are reported in the cost

Tables 12 and 13, respectively, for FAO and USDA. The following are the common

A B C D E E explosed G

2.5– 0.5% % 2.50% Technical documents

€/ hours

€/ hours

€/ hours

€/ hours

€/ hours

€/ hours

€/ hours

€/ hours

€/ hours

€/ hours

% 66.67% Technical

% 0.13 Technical

4.05 =E5/E12 Our

2) E10)/E12

1.13 =(E2 E25)/E12 Our

5.78 =E26 + E27 + E28 Our

1.82 =E6 E24 Our

1000) E23 (E16/ E15) E17 E8

1000) E17 (E16/ E15)\* E9

0.67 =E7/E18 Our

12.16 =E30 + E31 + E32 + E33 Our

17.94 =E29 + E34 Our

0.61 =(((E2 E4)/

9.38 =1/E19 (E21/

0.30 =1/E20 (E22/

documents

documents

elaboration

Our elaboration

elaboration

elaboration

elaboration

Our elaboration

Our elaboration

elaboration

elaboration

elaboration

• The frame proposed is developed for machine that works in huge areas or

• Total costs have to be used as an approximation of the cost machines.

machine literature. The main frames are elaborated and reported in

• Transaction and overhead costs are not included.

• Labor costs are not included.

Cost machine per hour, using the USDA frame.

23 Use coefficient

Timber Buildings and Sustainability

24 Maintenance

26 Fixed costs Annual

27 Interests per

28 Variable

29 Total fixed

31 Gasoline cost

32 Oil cost per

33 Tires cost per

34 Total variable

35 Total costs Total cost

Source: our elaboration on [6].

25 Variable expenditures coefficient

30 Variable costs

of available power

and repair coefficient

amortization per hour

hour

expenses

costs

Maintenance and repair costs per hour

per hour

hour

hour

costs per hours

machines per hours

95– 50%

0.10– 0.13

comments:

Table 13.

regions.

96

productions. This approach also ensures transparency and traceability of the assessment process, as well as flexibility being able to be adapted to the different process for entrusting the management of the stand.

References

2017

2012

[3] UN. 2015

paper, n. 99

Roma: FAO; 1992

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[12] Hippoliti G. Appunti di

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