| Forest plantation investments in Thailand were analyzed, incorporating financial risk and return, investor risk-tolerance levels, and probability distributions for the sources of financial risk. The Hertz method, a risk analysis procedure, was used to estimate land expectation values (LEVs) and other financial criteria for eucalyptus, teak, and Para rubber plantation investments in Thailand. To evaluate the financial returns and financial risk offered by eucalyptus, teak, and Para rubber plantations, expected LEVs and the associated standard deviations were estimated for a number of management scenarios. To investigate the impact of investor risk aversion on the optimum planting spacing and rotation lengths, expected utilities for each scenario were computed for various degrees of risk aversion. Further, the best investments among eucalyptus, teak, and Para rubber plantations were identified for various degrees of risk aversion. Sensitivity analysis, using rank order correlation to evaluate which variables cause the greatest variation in LEV, was conducted for each stochastic variable and LEV.; Eucalyptus plantations with 2 x 2-and 3 x 3-meter planting spacings, teak plantations with 15-year rotations, and Para rubber plantations with 25-year rotations were acceptable investments over a broad range of risk-aversion levels. Investors with low risk-tolerance levels were unlikely to invest in eucalyptus and teak plantations in Thailand. On the other hand, once a minimum threshold of risk tolerance was passed, eucalyptus, teak, and Para rubber plantations were all acceptable investments.; Para rubber plantations were preferred to teak and eucalyptus plantations because of their higher expected return and utility. Pulpwood price, sawlog price, and rubber sheet yield were the most influential variables on the variation of LEV for Eucalyptus camaldulensis, teak, and Para rubber plantations, respectively. |
