Economic analysis of sustainable management of candeia

Abstract

Candeia wood (Eremanthus erythropappus) is widely used for production of essential oil and its active ingredient, alpha-bisabolol, is consumed by both the cosmetics and pharmaceutical industry. This study aimed to determine the productivity and operating costs associated with exploration, transportation and commercialization of candeia timber obtained from sustainable management systems and used for oil production; to determine the gross income or revenue obtained from the sale of candeia timber; to analyze the economic feasibility of sustainable management of candeia. For the economic analysis, Net Present Value, Net Present Value over an infinite planning horizon, and Average Cost of Production methods were used. Results indicated that the most significant costs associated with candeia forest management involve transportation and exploration. Together they account for 64% of the total management cost. Candeia forest management for oil production is economically feasible, even in situations where the interest rate is high or timber price drops to levels well below currently effective prices. As far as candeia forest management is concerned, shorter harvest cycles allow higher profitability. However, even in situations where the harvest cycle is relatively long (30 years), the activity is still economically feasible.