Study area

The plantation of interest is located in the ejido of Palo Bendito, Huayacocotla municipality of, Veracruz, at 20°27' N and 98°29' W and an altitude of 2 460 m. The climate is temperate sub-humid, with rain in summer and frequent mists, with an average annual temperature of the coldest month (January) between 3 and 8 °C and the hottest month (May) higher than 16 °C. The average annual rainfall varies from 633 to 1 385 mm (^{Vásquez et al., 2015}).

The soils in the study area are of sedimentary origin, mainly with shales and sandstones, with a general clay-clay texture. The superficial drainage is fast, while the internal one is slow due to the high concentrations of humus. The main soils are of the Luvic phaeozem type, with a layer rich in organic matter and nutrients and Pellic vertisols with clay and waterproof texture. The average slopes are 30 % (^{Domínguez et al., 1997}).

The main types of vegetation are the pine forest and the pine-oak forest. In the area adjacent to the plantation dominates the pine forest, being Pinus montezumae Lamb. and P. pseudostrobus L. the dominant species, although there are isolated trees of P. patula and P. leiophylla Schiede ex Schltdl. & Cham.The main types of vegetation are the pine forest and the pine-oak forest.

Most of the forest management in the region is based on Seed trees; however, because the advantages of artificial repopulation are known in terms of shortening the turn, as well as the high growth rates of P. patula, regeneration is established immediately after the regeneration cutting through the planting of same species.

Establishment and management of the plantation

The plantation studied has an extension of 3 000 m² and was established by" the so-called individual-hole system during the rainy season (July) of 1998, with a spacing of 2.5 m between trees and rows. From then on, it was uncared-for and weeds, especially Baccharis conferta Kunth, which invaded the site and dominated the pines, could exceed them in height until the end of 2003. After this year, the individuals of B. conferta gradually succumbed under the pine canopy. In 2009, a clean operation was implemented to remove remnants of this herbaceous species with pruning of up to 7.5 m in height (three logs of 2.5 m in length), a very light experimental thinning (only in some experimental plots) and a commercial thinning to the end of 2015. The regeneration cutting will be carried out in 2018 when the trees are 20 years old, as proposed by ^{Santiago et al. (2015)} for the forest species in the Zacualtipán region, Hidalgo.

Determination of expenses and income

The costs that were incurred from the establishment of the plantation (1998 to 2003) were estimated based on questionnaires applied in the community, about the prevailing wages in the area in the corresponding years, as well as by yield estimates per day in the activities carried out in that period. From 2003 and until 2016, the costs of each of the activities carried out in the plantation were recorded on time. With this experience during the period above, estimates of the activities planned for the 2016-2018 period were made. In this way, the flow of project expenditures was established, in which an annual increase in the minimum wage of 3.5 % was considered, as occurred from 2010 to 2014 (^{Moreno and Garry 2015}).

The economic benefits of the project were established based on the activities that generated or will generate some commercial product, corresponding to two thinning harvests and one regeneration cutting using the clearcutting system. The value of the wood resulting from the thinning harvests made in 2012 and 2015 was recorded at the time. In the case of the volume of wood to be generated with the cutting at the end of the shift (2018), estimates were made based on the dendro-epidometric records of the plantation of the estimated production of sawn wood (board feet) based on the Doyle rule. The value of the average current price obtained from several prices of sawn timber in the region between Texcoco, Estado de México, Tulancingo, Hidalgo and Huayacocotla, Veracruz, in September 2015 was used.

The sale of pulpwood for paper was also considered in the project’s income. This wood comes from the pieces with diameters larger than 13 cm and minimum length of 1.27 m.

The wood volumes of the plantation were used to estimate the income based on annual measurements of the diameter at breast height (DBH) of all trees during the 2009-1017 period. The height (A) of the trees was also calculated from the DBH, by the parameterized Gompertz model for Pinus patula (^{Santiago, 2009}). From DBH and A, the volume (VOL) of the stem of each of the trees was estimated from 2009 to 2016 using the model generated by ^{Arteaga (2003)} for the species under study. Increases in this item (IVOL) with the annual volumes were estimated.

Based on the volumetric stock in the plantation, from 2009 to 2015, a model was developed to represent the accumulation of wood volume over time and apply that model after the implementation of the thinning of the end of 2015, even though the model could underestimate the volume of wood after thinning, given that with this treatment, the resources of the site are redistributed in a smaller population of trees, which improves growth (^{López and Flores, 2016}).

Data analysis

The costs and the gross income of the project throughout its validity were discounted at year zero (0) of the project, with the VA function (current value) of EXCEL Ver. 2013 (^{Microsoft Office, 2013}). The discount rate of 12 % was the same used by ^{López and Musálem (2007)}, which also corresponds to that by ^{Cubbage et al. (2011)} for forestry projects in Mexico. Based on the discounted amounts of expenditures and income from the project, the calculations of the financial indicators Net Present Value (NPV), Benefit Cost Ratio (B/C) and Internal Rate of Return (IRR) were made (^{Sunday et al., 2013}). In addition, an analysis of the forestry activities that have the greatest financial impact on the project was made.

The formula used for the update (VA) of the gross income (G) and expenses (C) of the project was:

(1)

(^{Lutz, 2011})

Where:

VA = Present value of one expense (C₀) or income (G₀); ($MX)

VF = Future value of one expense or income; ($MX)

r = Discount rate (%)

n = Period in which the expense or income occurred; (year)

From the expenses or incomes updated to the year zero, the NPV, B/C and IRR were calculated through the following equations:

Where:

NPV = Net present value of the project; ($MX)

n = Period (annuity) in which one expense or income occurs

t = Annuity corresponding to the end of the silvicultural rotation period of

the plantation

G ₀ = Gross profit discounted to the year zero; ($MX)

C ₀ = Economic expenses discounted to the year zero; ($MX)

Where:

B/C = Cost/benefit relationship

n = Period (annuity) in which one expense or income occurs

t = Annuity corresponding to the end of the silvicultural rotation period plantation

G₀ = Gross profit discounted to the year zero; ($MX)

C₀ = Economic expenses discounted to the year zero; ($MX)

In the case of the IRR, the calculation is made by trial and error, based on the NPV formula, which changes the discount rate (r) during the update process (equation 1), until achieving a NPV = 0 (^{Lutz, 2011}). However, at present there are various computer programs for calculation in practical form; in this case, the "IRR calculator" located on the https://financial-calculators.com/irr-calculator website was used (^{IRR-Calculator, 2017}).

Epidometric development of the plantation

Figure 1 shows the values of real volume and modeling per year during the 2009-2015 period. There are no epidometric records of the plantation before 2009. The trend of the accumulation of timber volume of stems was linear, which reached an increase of 38.39 m³ ha^-1 year^-1 (Figure 1), a similar value to that recorded by ^{Sáenz et al. (2011)} for pine plantations in Michoacán and even higher to that mentioned by Webb (1980, quoted by ^{Muñoz et al., 2010}).

Figure 1 Actual volume and modeling in the plantation of Pinus patula Schiede ex Schltdl. et Cham.in Huayacocotla, Veracruz, during the 2009 - 2015 period. 

Figure 2 shows volume increases from 2009 to the scheduled completion of the project (2018). The figure indicates that the annual volume increased until 2011. In 2012, an experimental thinning was carried out in the plantation, so the increments decreased in that year. However, one year after (2013), the volume increase reached a similar level to that of 2010 and continued such tendency; however, in 2015 a decrease was observed, which is ascribed to the high density of trees, which indicates that the plantation required a cutting that year. This assertion coincides with the finding of ^{Vásquez (2014)}, who determined that the net primary productivity (NPP) of that plantation began to decline and recommended the implementation of a thinning.

Figure 2 Behavior of the annual volume increase (IVOL, m³ha^-1year^-1) recorded between 2009 and 2018, including the thinnings in 2012 and 2015 and predictions of the increase in volume between 2016 and 2018 in the plantation of Pinus patula Schiede ex Schltdl. et Cham. in Huayacocotla, Veracruz. 

The prescription of a thinning in 2015 is also supported in the density guide for pine plantations for timber production, proposed by ^{Traugott and Dicke (2006)} (Figure 3). The plantation under study had 813 trees ha^-1 in 2015 and an average DBH of 25 cm. According to the aforementioned density guide, adapted to the metric system, the interception of these values falls within the "thinning area" since it is located above the threshold line between thinning and no-thinning (Figure 3).

Source: Modified from ^{Traugott and Dicke (2006)}.

Figure 3 Decision graph to "thin or wait".  

Based on the plantation volume prediction model (Figure 1), for 2017 and 2018 it is expected that the volumetric increases reach at least the average level that the plantation had before the thinning (38.39 m³ ha^-1 yr^-1, Figure 2); although theoretically, increases in volume should reach levels above the means, given the improvement in the availability of resources (water, nutrients, light, air and underground spaces, among others) per tree remaining after the thinning (^{Rodríguez et al., 2011}).

Figure 4 shows the volumes recorded annually for the period between 2009 and 2015, as well as the volumes predicted for the period after commercial thinning.

Figure 4 Volumetric stock registered in the plantation for the period 2009-2015 and estimated for the period 2016-2018, after a commercial thinning in 2015. 

According to Figure 4, in 2015 a total of 120.14 m³ ha^-1 (480.54-360.40 m³ ha^-1) was obtained as a result of commercial thinning and in 2018, a total of 437.18 m³ ha ^-1 will come from the regeneration cutting. From the conversion, using the Doyle rule, 1 365 fb of Roundwood from the 2015 thinning was obtained, while from the regeneration cutting (in 2018), it is estimated a total of 8 944 fb of sawn wood. Additionally, logs of 1.27 m long and a low diameter larger than 13 cm, once stacked, produced a total of 6 m³ for the 2015 thinning and will produce 61.5 m³ for the regeneration cutting in 2018, volumes that will be commercialized for paper pulp.

Financial analysis of the plantation

Tables 1 and 2 show the not-updated and updated flows, respectively, of the project's expenditures. The second indicates that the activities that impact the project's costs most intensively are payment for technical forest services, followed by pruning. As ^{Brown (2000)} generalizes for all types of forest plantations, the costs that most affect project expenditures are those that are made in the first years; such is the case of pruning, which added to technical services, raise the initial costs.

The estimates made to determine the average price of pine sawn wood ($ MX fb^-1) in the regions of Texcoco, Estado. de México, Tulancingo, Hidalgo and Huayacocotla, Veracruz, indicated that it was $ MX 12.75 for September 2015. In a similar way, in the Huayacocotla region, pulpwood was rated at $ MX 750.00 per m³, stacked at the bottom of the road. Therefore, Table 3 indicates that the most important revenues in the plantation come from commercial thinning and regeneration cutting. These two income concepts were verified during the last years (years 17 and 20 out of 20), which means that when they are discounted to year zero, they have little impact on the benefits associated to the project. According to the former, it is deduced that what is recommended for this type of projects in so far as they are current, is to achieve a design in which the first few years have the minimum possible costs and even generate income. This strategy is also suggested by ^{Brown (2000)}.

The preceding can be achieved, for example, by incorporating high tree densities to carry out commercial thinning in the first 5 to 10 years in which poles or paper pulp can be sold. Also, with a high-density system, it is possible to avoid activities such as cleaning and pruning at the beginning of the project, which would reduce expenditures for the execution of those activities.

Another option to generate income in the first years of the project is the implementation of agroforestry systems. In this case, the density of the trees should be so low that it allows the cultivation of agricultural species that provide economic resources during the first years before canopy closure occurs (Conafor-UACh, 2013). ^{López and Musálem (2007)} evaluated several alternatives of this type of systems and found that some of them, especially those that include profitable agricultural crops such as coffee, peanuts and in some cases corn interspersed with red cedar (Cedrela odorata L.), improved or kept the profitability of the projects and increased their social acceptance.

Similarly, ^{Romo et al. (2012)} recorded that in El Fortín, Atzalan municipality, Veracruz, the agro-silvo-pastoral system designed through the combination of melina (Gmelina arborea Roxb.), maize, insurgent grass (Brachiaria brizantha (Hochst ex A. Rich.) Stapf and cattle provided the best financial indicators.

The combination of timber trees with the cultivation of Christmas trees can also be an option to generate income during the first 8 to 12 years, mainly, but not exclusively, in temperate climates. In this case, the density of wood for trees must be low so that the Christmas trees receive enough solar radiation and develop balanced crowns.

At the end of the project, the net present value of the project was positive (NPV = $ MX 37 959.00 ha^-1) (Table 4), which indicates that the implementation of the studied plantation is profitable from the financial point of view (^{Holopainen et al., 2010}). The above is also confirmed by the benefit-cost ratio (B/C), which resulted in a value of 2.32 (Table 4). This means that each peso invested in the project is recovered and additionally $1.32 per peso invested. The value found for the B/C ratio is comparable to those obtained by ^{López and Musálem (2007)} for agroforestry systems or plantations of red cedar (C. odorata), Primavera (Roseodendron donnell-smithii (Rose) Miranda) or cedar walnut (Juglans pyriformis Liebm.), in Los Tuxtlas, Veracruz, and even higher than those determined for the agroforestry system recommended by ^{Romo et al. (2012)}.

The IRR resulted in 26.61 %, which implies that only with a discount rate as high as that, the NPV would be zero; however, given that the discount rate is much lower (12 %), the financial viability of this project is right.

The indicators show that the project is financially viable, even though in the quantification of income by sawing it was considered as the price of wood, the second class. This reduces the estimated margin of profit; however, pruning has been applied to the plantation in such a way that it guarantees the production of a considerable amount of first-class timber, which means higher product prices, that, eventually, will increase the NPV, the B/C ratio and the IRR.

On the other hand, this analysis did not include financial support from government sources (subsidies). If they If they were taken into account, provided that they are feasible to achieve for this type of project, it is highly probable that the financial indicators will improve substantially.