APPRECIATION OF THE CHILEAN FOREST RESOURCE: … · 2 Appreciation of the Chilean Forest Resource:...

APPRECIATION OF THE CHILEAN FOREST RESOURCE:

PLANTATIONS OF PINUS RADIATA AND EUCALYPTUS SP.

1985-1996

IGNACIO CERDA VARGASRICARDO NÚÑEZ SANDOVAL

Planning and Statistics BranchPolicy and Planning Division

Forestry Department

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© FAO 1998

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Appreciation of the Chilean Forest Resource: Plantations of Pinus Radiata and Eucalyptus Sp. 1985-1996

1 COMBINED APPRECIATION: PINUS RADIATA AND EUCALYPTUS SP.

1.1 Combined Appreciation: 1985-1996

The Table 1 shows the outputs of the calculations on the appreciation of the forest resourcesPinus radiata and Eucalyptus sp.

Table 1Combined Appreciation 1/

(In millions of US$, 1996)Asset value Land value Timber value Appreciation

Rotation Period Rotation Period Rotation Period Rotation Period

Year24

yearsold

20yearsold

20yearsold (*)

18yearsold

24yearsold

20yearsold

20yearsold (*)

18yearsold

24yearsold

20yearsold

20yearsold (*)

18yearsold

24yearsold

20yearsold

20yearsold (*)

18yearsold

1985 3,535 3,621 4,850 3,640 890 998 1,512 1,055 2,645 2,623 3,338 2,585 114 141 189 1451986 3,777 3,886 5,196 3,911 945 1,057 1,591 1,116 2,833 2,828 3,605 2,794 140 165 219 1651987 3,995 4,118 5,503 4,144 989 1,106 1,660 1,167 3,005 3,012 3,843 2,977 127 158 210 1581988 3,898 4,033 5,369 4,069 993 1,107 1,646 1,166 2,905 2,926 3,723 2,903 110 147 196 1501989 4,129 4,286 5,684 4,327 1,065 1,183 1,741 1,244 3,064 3,103 3,943 3,083 135 167 224 1651990 4,429 4,587 6,052 4,627 1,171 1,295 1,880 1,359 3,258 3,292 4,172 3,268 147 179 238 1791991 4,940 5,095 6,658 5,125 1,328 1,456 2,065 1,523 3,612 3,639 4,592 3,601 127 156 217 1531992 5,288 5,458 7,075 5,481 1,463 1,592 2,204 1,659 3,826 3,866 4,871 3,821 141 173 226 1661993 5,809 5,987 7,673 6,006 1,613 1,747 2,382 1,817 4,196 4,239 5,291 4,189 178 210 265 2001994 6,086 6,263 8,000 6,278 1,746 1,884 2,538 1,956 4,341 4,379 5,463 4,322 183 219 271 2071995 6,368 6,554 8,311 6,573 1,927 2,066 2,723 2,138 4,442 4,488 5,588 4,435 147 194 239 1861996 6,430 6,610 8,367 6,624 1,972 2,112 2,774 2,185 4,457 4,497 5,593 4,439 176 219 265 210

Source: Own elaboration.

(*) Estimated with function linear: 25 m3/ha/year. INFOR1/ Corresponds addition of tables 2 and 6

2


Figure 1

Appreciation total (Radiata pine and Eucalyptus): 1985-1996

0

50

100

150

200

250

300

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Appreciation (24years old)


Appreciation (20 yearsold (*))


3


2 METHODOLOGY

2.1 Pine Volumetric Growth

To determine the volumetric growth of pinus radiata have been used two methods:

a) Logistic Function of the Pine Volumetric Growth

We have determined a Logistic Function of the Pine Volumetric growth in according to the recordgiven by the INFOR. In this relationship are considered: volume and age.

The function is the following: f(t) = 4.970525t + 2.188126t2 - 0.044910t3

with an adjusted R - squared of 0.9969.

b) Function linear : 25 m3/ha/year

This yield corresponds to the Annual Medium Increase used by the INFOR to determine thevolume by hectare and by age.

2.2 Eucalyptus Volumetric Growth

It has been used the Annual Medium Increase applied by the INFOR and corresponds to 22m3/ha/year. It has not been possible to estimate a function growth logistics by lack of information.

Logistic Shape Radiata Pine

0

100

200

300

400

500

600

700

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38

Relationship beteween standing volume per hectare (net of defect) and age

4


2.3 Rotation Period

To determine the rotation period the following criteria have been used.

a) Technically Optimal Rotation Period

The equilibrium condition is: f’(t) = f(t)/t

Result: 24 years old

b) Economical Solution of Faustmann-Pressler -Ohlin (Infinite Plantation Cycles)

−− −−=

t rtrt dteRKetPfVANMax0

)(

0)()(' =−−= RtrPftPfdt

dVAN

rRV =

The equilibrium condition is: [ ]VtPfrtPf += )()('

V = 800 US$/ha (estimated figure by the INFOR for forest land exclusively)

Legend

r : interest rateK: regeneration costR: land rent

Result: 18 years old

c) Rotation Age of Major Frequency Registered in Chile for Pinus Radiata

According to the record given by the INFOR the rotation age of major frequency registered inChile is of 20 years. This period was used to determine the appreciation not only in the logisticfunction of the pine volumetric growth, but also in the linear function.

d) Rotation Age of Major Frequency Registered in Chile for Eucalyptus

According to the record given by the INFOR the rotation age of major frequency registered inChile for the eucalyptus is of 12 years. This period was used to determine the appreciation as alinear growth function (264 m3/ha).

2.4 Calculus of the Appreciation of the Forestry Asset

The calculus formuli to determine the appreciation of the forestry asset have been suggested byMichael Linddal.1

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The appendix shows assess the asset value and appreciation of a perpetual forest rotation withregeneration costs (Co), rotation age (T), interest rate (r), volume harvested (q(T)), and flat ratecurrent resource rents of timber price (p) less extraction costs (c).

Continuous discounting is assumed: (1+r)-rt ≈ e-rt.

Every rotation has prior to the establishment (planting) a net present value of R (equation 1).For perpetual forest rotation the net present value is an annuity of a payment R every T year.This is equal to the land value for forest S(T) (equation 2). After planting the establishment costsare sunk cost. The asset value of a forest of age t is equal to the value of the harvest in (T-t)years and the value of forest land thereafter. The asset value is known as the soil expectationvalue SEV(t) (equation 3). The appreciation from year t to year t+1 (D(t)) is the difference in theasset value (equation 4).

Equation 1: Value of one rotation R = H(T) * e-rT – CoEquation 2: Value of forest land S(T) = R / (1- e-rT)Equation 3: Soil expectation value SEV(t) = [ S(T) + H(T) ] * e-r (T-t)

Equation 4: Appreciation D(t) = SEV(t+1) – SEV(t) = SEV(t+1/2)*r

For land coming into forest either as replanted or afforestation the asset value in t=0 isSEV(0)=[S(T) + H(T)] * e-rT because the regeneration costs are sunk. The asset value for t=T isSEV(T) = S(T) + H(T) just before harvest (sum of stumpage and land value) and S(T) just afterharvest (land value only) but before replanting. For forest stands not harvested in year T or witha stand age above T it is assumed that the asset value is H(T) + S(T), i.e. there is neither anappreciation due to growth or a depreciation due to over maturity of the timber.

Legend:

R = net present value of one forest rotationt = stand ageT = rotation ager = interest rateCo = regeneration costH(T) = harvest value at rotation ageS(T) = land value for forest at rotation age TSEV(T) = soil expectation value (asset value)D(t) = appreciation of asset value from t to t+1

6


7


3 APPRECIATION FOR THE FOREST RESOURCE PINUS RADIATA.

3.1 Asset Value, Land Value, Timber Value and Appreciation

The outputs produced in the calculation of the appreciation of the forest resource of Pinusradiata for the period 1985-1996 is the following.

Table 2Appreciation

(In millions of US$, 1996)Asset value Land value Timber value Appreciation

Year Rotation Period Rotation Period Rotation Period Rotation Period24

yearsold

20yearsold

20yearsold (*)

18yearsold

24yearsold

20yearsold

20yearsold(*)

18 yearsold

24yearsold

20yearsold

20yearsold(*)

18 yearsold

24yearsold

20yearsold

20yearsold (*)

18yearsold

1985 3,207 3,293 4,522 3,312 708 816 1,330 873 2,499 2,477 3,192 2,439 100 127 174 1301986 3,400 3,508 4,818 3,533 734 847 1,381 906 2,665 2,661 3,437 2,627 121 146 200 1461987 3,585 3,709 5,094 3,735 762 879 1,433 940 2,823 2,830 3,661 2,795 109 139 191 1391988 3,444 3,578 4,914 3,615 742 856 1,395 915 2,702 2,723 3,520 2,700 92 130 178 1331989 3,587 3,744 5,142 3,785 768 886 1,444 947 2,819 2,858 3,698 2,838 123 154 212 1531990 3,766 3,923 5,388 3,963 805 929 1,514 993 2,961 2,994 3,874 2,970 125 157 216 1571991 4,031 4,185 5,748 4,215 838 967 1,576 1,034 3,192 3,218 4,172 3,181 133 162 223 1591992 4,159 4,329 5,946 4,352 842 972 1,584 1,039 3,317 3,357 4,362 3,312 110 143 196 1351993 4,339 4,517 6,203 4,537 874 1,008 1,643 1,078 3,465 3,509 4,560 3,459 115 147 202 1371994 4,476 4,652 6,390 4,667 900 1,038 1,692 1,110 3,576 3,614 4,698 3,557 104 140 192 1281995 4,520 4,706 6,463 4,725 905 1,044 1,702 1,117 3,615 3,662 4,761 3,609 73 120 164 1111996 4,528 4,708 6,466 4,723 911 1,051 1,713 1,124 3,617 3,657 4,752 3,598 81 123 169 114

Source: Own elaboration

(*) Estimated with function linear: 25 m3/ha/year. INFOR

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Figure 2

Appreciation Radiata Pine: 1985-1996

0

50

100

150

200

250

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Appreciation 24years old


Appreciation 20 yearsold (*)


9


3.2 Appreciation of Asset Value From “t” to “t+1”

3.2.1 Technically Optimal Rotation Period : 24 Years Old

p-c 14.33 $ / m3 R 570 $ / haCo 530 $ / ha H(T) 7,452 $ / har 7.97% T 24 yrs

S(T) 669 $ / ha

t q(t) H(T) R S(t) SEV(t) D(t)0 1,199 991 0 1,299 1082 0 1,406 1173 4 1,523 1264 12 1,649 1375 24 1,786 1486 39 1,934 1607 57 2,095 1748 77 2,269 1889 100 2,457 204

10 124 2,661 22111 150 2,882 23912 178 3,121 25913 207 3,379 28014 236 3,660 30415 266 3,963 32916 297 4,292 35617 327 4,648 38618 358 5,034 41819 387 5,452 45220 417 5,904 49021 445 6,394 53022 471 6,924 57423 497 7,499 62224 520 8,121 024 520 7,452 570 669 8,121 -6,922

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3.2.2 Rotation Age For The Radiata Pine: 20 Years Old

The Logistic Pine Growth Function was applied.


S(T) 772 $ / ha

t q(t) H(T) R S(t) SEV(t) D(t)0 1,302 1081 0 1,410 1172 0 1,527 1273 4 1,654 1374 12 1,791 1495 24 1,939 1616 39 2,100 1747 57 2,274 1898 77 2,463 2049 100 2,667 221

10 124 2,889 24011 150 3,128 25912 178 3,388 28113 207 3,669 30414 236 3,973 33015 266 4,303 35716 297 4,660 38717 327 5,047 41918 358 5,465 45319 387 5,919 49120 417 6,410 020 417 5,638 615 772 6,410 -5,108

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3.2.3 Rotation Age of Major Frequency Registered in Chile for Pinus Radiata : 20 Years Old

Annual Medium Growth equal to 25 m3/ha/year

p-c 15.09 $ / m3 R 1,002 $ / haCo 530 $ / ha H(T) 7,545 $ / har 7.97% T 20 yrs

S(T) 1,258 $ / ha

t q(t) H(T) R S(t) SEV(t) D(t)0 1,788 1481 25 1,936 1612 50 2,097 1743 75 2,271 1884 100 2,459 2045 125 2,663 2216 150 2,884 2397 175 3,124 2598 200 3,383 2819 225 3,663 304

10 250 3,967 32911 275 4,296 35612 300 4,653 38613 325 5,039 41814 350 5,457 45315 375 5,910 49016 400 6,400 53117 425 6,931 57518 450 7,506 62319 475 8,129 67420 500 8,803 020 500 7,545 1,002 1,258 8,803 -7,015

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3.2.4 Economical Solution of Faustmann-Pressler -Ohlin (Infinite Cycles of Plantation): 18 years old


S(T) 825 $ / ha

t q(t) H(T) R S(t) SEV(t) D(t)0 1,355 1121 0 1,468 1222 0 1,590 1323 4 1,722 1434 12 1,864 1555 24 2,019 1676 39 2,187 1817 57 2,368 1968 77 2,564 2139 100 2,777 230

10 124 3,008 24911 150 3,257 27012 178 3,527 29313 207 3,820 31714 236 4,137 34315 266 4,480 37216 297 4,852 40217 327 5,254 43618 358 5,690 018 387 4,865 629 825 5,690 -4,335

Other Premises and Assumptions

In order to carry out the calculations the following premises and assumptions were taken inconsideration:

a) The costs of exploitation of an hectare of Pinus radiata stays constant during all theperiod of analysis. It was estimated for 24, 20 and 18 years.(See Table 5)

b) The price on site of a cubic meter of Pinus radiata wood equal to 25 US$/ m3.. It wasvalued constant for all of the period of analysis. (See Table 4)

c) The real utilized annual interest rate (r) is 7.97%, which is close to the interest rates thatthe managers of the forestry industry use when they borrow money for the long term. Forits calculation, it was deflected 6.6%, the appraisal of inflation corresponding to the year1996. The nominal annual interest rate of 8.5% for the long term credits. The real interestrate stays constant during all the period of analysis.

d) All the calculations have been carried out in dollars of 1996. The average type of changecorresponding to that year was of 1US$= $Ch 396.773. Source: Central Bank of Chile.Monthly Bulletin N° 8733, July 1997.

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e) The information registered by INFOR on the Inventory of Plantations of Pinus radiata iscomplete- by age range- for the years 1985 to 1996. However, it was necessary estimatethe information for the day of plantations of the year 1985, 1986 and 1987, whichaccording to the statistics, should be included in the range of age 1 – 5 years. That iswhy, to determine the right numbers for each age, every range was divided by 5. In allcases, the figures are nets of forest fires and plagues. The coefficient’s estimate of thelosses for plagues, illness and blazes for the Pinus radiata, already applied by INFOR intheir statistics, are contained in the Introduction of the Environmental Accounting in theNational Bills of the Central Bank of Chile Project. Investigation financed by the CentralBank of Chile and executed by the Forest Institute in collaboration with the Departmentof Agrarian Economy of the Catholic University of Chile. 1996.

f) To verify the consistency of the figures given by INFOR, a follow-up of the plantationsbetween 1955 and 1996 was done to determine the planted surface by age withouttaking into account the losses by fire, plagues and harvest. These figures compared tothe registered by INFOR are consistent in spite of the fact that they present with a rangeof 5 years.

g) The principal destinations of the Pinus radiata harvest are saw logs (80%) and pulp wood(20%). The registrations of current demand shows a preferential behaviour for pulpwood products over saw wood products. It is estimated that 96% of the net productioncoming of the Eucalyptus sp. forests, including thinning, is oriented towards pulp orderived products.

3.3 Utilized Information. Explanatory Notes.

Following is the detailed information that was utilized in order to calculate the Appreciation of theForest Resource Pinus radiata.

3.3.1 Planted surface of pinus radiata for age.

The planted surface of Pinus radiata for age for the period 1985 – 1996 has been obtained fromthe official figures published by the Chilean Forest Institute (INFOR). These figures are nets ofharvests and losses from forest fires and plagues.

The utilized information presents the forest hectares assembled in categories of age, withranges of 5 years. To estimate the corresponding hectares for each age class, a simple averagefor range of age was calculated. The basic information is presented in Table 3.

The harvested hectares in each year were added, before the nets of harvest and of plagues andfires, to determine the hectares of standing crop.

A special calculation for the age 0 has been carried out for the years 1985, 1986 and 1987. Theplantations of age 0, according to the official figures of INFOR, are included in the range of ages1-5 years. To get them, the standard of survival which is equivalent to an average of 75%, wasapplied to the net plantation figures; getting this way the net plantations for the year 0, which areat the same time, subtracted of the range of ages 1-5 years.

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Table 3Planted Surface of Pinus Radiata by Year and Age.

(In Standing Crop Hectares).Year Harvest Age

0 1 - 5 6 - 10 11 - 15 16 - 20 21 - 25 26 - 30 31 &more

TOTAL

1996 35,990 60,300 380,483 309,413 312,658 252,242 65,346 4,319 1,624 1,386,3851995 37,095 63,982 356,279 316,349 325,863 251,912 58,040 5,460 1,861 1,379,7461994 32,011 63,162 370,731 313,010 306,935 247,696 64,040 5,555 4,757 1,375,8861993 29,252 84,157 361,967 305,888 306,815 230,805 62,368 4,292 4,626 1,360,9181992 28,014 81,868 337,235 314,457 301,866 208,987 59,323 6,175 2,901 1,312,8121991 22,748 75,416 322,740 365,354 302,981 165,884 51,798 14,106 7,046 1,305,3251990 21,435 61,310 325,626 344,426 309,624 142,272 40,307 10,363 9,365 1,243,2931989 20,069 64,881 326,693 303,244 303,431 141,437 32,086 9,267 11,248 1,192,2871988 22,189 61,405 322,574 306,078 279,600 124,456 28,441 12,803 12,401 1,147,75819871/ 20,907 41,540 324,712 309,401 282,197 133,911 38,805 12,746 16,316 1,159,62819861/ 16,926 41,294 325,122 315,261 255,438 113,799 36,986 19,483 14,402 1,121,78519851/ 17,313 60,185 351,486 325,190 195,187 96,100 34,734 25,280 12,273 1,100,435

Source: Own elaboration on figures of INFOR.

1/ The official figures of INFOR, for these 3 years, corresponding to the range ofages 1-5, include the plantations of age 0. It has been necessary to separate thefigures for each range of age, taking on that only 75% of the plantations of the year0 survived.

Figure 3Planted Surface of Pinus Radiata

(Hectares)

1.000.000

1.050.000

1.100.000

1.150.000

1.200.000

1.250.000

1.300.000

1.350.000

1.400.000

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

In the projection, a volumetric growth equal to 25 m3/ha/year is supposed, and corresponds tothe pondered average calculated for the country. In Chile, Pinus radiata grows in an extensionof more than 1,000 kilometers of surface.

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In order to determine the rhythm of the volumetric growth of Pinus radiata, in annual m3 perhectare, the following variables are considered : Zones of mayor concentration of plantations,site index2 and site class.

3.3.2 Prices

In order to calculate the Actual Value of the Pinus radiata forest resource, the on the site costs ofwood was utilized. This, to their time, was determined from the costs of wood put in factory, towho the expenses for concept of discharge and patio, transport from the forest until the plantand hauling were discounted.

Table 4On The Site Price Calculation

(Us$/M3)Items P. radiata

Put on fabric 45Discharge & patio -4Transport (forest – mill) -14Hauling -2On the site price 25Harvest -5.5Road construction -2Standing forest price 17.5Source: Elaboration on figures of the INFOR

The evolution of the real prices for Pinus radiata logs for the period 1986 – 1996 are shown inTable 15.

3.3.3 Cost Of On Site Production Of 1 M3 Of Pinus Radiata.

In order to calculate the cost of on site production of an hectare of Pinus radiata, the followingitems were considered : Establishment of the Plantation, Fire prevention maintenance,Administration, Protection and Road Construction.

In order to determine the average cost of on site production of 1 m3 of wood, the followingassumptions were taken in consideration:

• Τo calculate the volumetric growth have been used a Logistics Function.

• The final objective of forestation is to produce saw logs (80%) and pulp wood (20%).

• Two commercial thinnings and 3 prunes are realized in the 20 year period.

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Table 5Cost of Production of Pinus Radiata1/.

Establishment: 530 US$/haFigures in US$/m3

24 yearsold

20 yearsold

20 yearsold (*)

18 yearsold

Harvest 5.29 6.59 5.50 7.68Road construction 2.00 2.00 2.00 2.00Fire prevention maintenance 2.43 2.08 1.73 1.98Administration and Protection 0.95 0.81 0.68 0.77

SOURCE: Own elaboration on figures of INFOR

(*) Estimated for function linear: 25 m3/ha/year, INFOR.1/ The cost of management was not included because it finances itself with the output from thethinned and pruned wood sales.

Cost of Establishment.

The cost of establishment varies according to the initial considerate density and includes thefollowing tasks: Underbrush clearance, burning, fencing, soil preparation, fire prevention,plantation, control of overgrowths and/ or rodents and fertilization.

The initial value of the establishment of the plantation in the year zero, according to INFOR, is of530 US$/ ha.

Cost of Harvest.

It includes: Cutting, logging and encampment installation.

Fire Control Maintenance.

The annual cost is of 19 US$/ ha/ year. The Future Value of this annuality was calculated, for:24, 20 and 18 years and to an annual interest rate of the 7.97%.

Administration and Protection

Includes: Surveillance, supervision, minor maintenance, insurance against fire and disasters,plague control labors, and fire fighting.

The cost of Administration and Protection are, according to INFOR, of 7.4 US$/ha/year. TheFuture Value of this annuality was calculated for : 24, 20 and 18 years to an interest rate of the7.97%.

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4 APPRECIATION FOR THE FOREST RESOURCE EUCALYPTUS SP.

4.1 Asset Value, Land Value, Timber Value and Appreciation.

The outputs produced in the calculation of the appreciation of the forest resource of Eucalyptussp. for the period 1985-1996 is the following.

Table 6Appreciation

(In Millions of US$, 1996)Year Asset

valuelandvalue

timbervalue

appreciation

1985 328 182 146 151986 378 210 167 191987 409 227 182 181988 454 251 203 181989 542 297 245 121990 663 366 298 221991 910 490 420 -61992 1,129 620 509 311993 1,470 739 731 631994 1,611 846 765 791995 1,848 1,021 827 751996 1,902 1,061 841 96

Source: Own elaboration

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Appreciation Eucalytus: 1985-1996

-20

0

20

40

60

80

100

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Asset value, land value, timber value: Eucalyptus, 1985-1996

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Asset value land value timber value

19


4.2 Appreciation of Asset Value From “t” to “t+1”

p-c 27.75 $ / m3 R 2,291 $ / haCo 524 $ / ha H(T) 7,326 $ / har 7.97% T 12 yrs

S(T) 3,721 $ / ha

t q(t) H(T) R S(T) SEV(t) D(t)0 4,245 3521 22 4,597 3812 44 4,979 4133 66 5,392 4474 88 5,839 4845 110 6,323 5246 132 6,848 5687 154 7,416 6158 176 8,031 6669 198 8,698 721

10 220 9,419 78111 242 10,201 84612 264 11,047 012 264 7326 2291 3721 11,047 -6,802

In order to carry out the calculations the following premises and assumptions were taken inconsideration :

a) The costs of exploitation of an hectare of Eucalyptus sp stays constant during all theperiod of analysis. It was estimated to be 16.23 US$ / m3. (See Table 9)

b) The price on site of a cubic meter of Eucalyptus sp. wood equal to 39 US$/ m3 wasvalued constant for all of the period of analysis. (See Table 8)

c) The real utilized annual interest rate (r) is 7.97%. And it belongs to a nominal annualinterest rate of 8.5% for the long term credits. To deflect, a 6.6% appraisal of inflationcorresponding to the year 1996 was applied. The real interest rate stays constant duringall the period of analysis.

d) All the calculations have been carried out in dollars of 1996. The average type of changecorresponding to that year was of 1US$= $Ch 396.773. Source: Central Bank of Chile.Monthly Bulletin N° 8733, July 1997.

e) The produced volume at the end of the 12 years has been valued in 264m3 / ha. In thiscalculation all the trees of same age (which are the majority) or superior to 12 years(mature trees that have not been harvested in the previous years) are considered. Forthe last ones, the output stays on 264 m3/ha. These calculations are produced from theAnnual Medium Increment, that in case of the Eucalyptus sp. is 22 m3/ ha/ year. Source:The forest sector: achievements and challenges. Santiago of Chile. INFOR 1996.

20


f) The information registered by INFOR on the Inventory of Plantations of Eucalyptus sp. iscomplete- by age range- only for the years 1995 and 1996. However, for the years 1985to 1994 only exists global information. Consequently, in order to carry out the requiredcalculations presently reported, this global information by ages has been distributed,applying an average percentage distribution (% T) produced during the years 1995 and1996.

g) The principal destination of the Eucalyptus sp. harvest is pulp. The registrations ofcurrent demand shows a preferential behaviour for pulp wood products over saw woodproducts. It is estimated that 96% of the net production coming of the Eucalyptus sp.forests, including thinnings, are oriented towards pulp or derived products.

h) In all cases, the figures are nets of forest fires and plagues. The coefficient’s estimate ofthe losses for plagues, illness and blazes for the Eucalyptus sp., already applied byINFOR in their statistics, are contained in the Introduction of the EnvironmentalAccounting in the National Bills of the Central Bank of Chile Project. Investigationfinanced by the Central Bank of Chile and executed by the Forest Institute incollaboration with the Department of Agrarian Economy of the Catholic University ofChile. 1996.

4.3 Utilized Information. Explanatory Notes.

Next, a detailed presentation of the information utilized in order to calculate the Appreciation ofthe Forest Resource Eucalyptus sp.

4.3.1 Planted surface of eucalyptus sp. by age

The surface planted with Eucalyptus sp. corresponding to the period 1985-1996, and detailed byage, has been produced through official figures published by the Forest Institute of Chile(INFOR). These figures are nets3 of harvest and losses for blazes and plagues.

21


Table 7Surface Planted of Eucalyptus Sp. by Year and Age : 1985 - 1986

(Standing Forest Hectares)Year Harvest 0 1 - 5 6 - 10 11 - 15 16 - 20 21 - 25 26 - 30 31 &

moreTOTAL

1996 8,329 17,410 199,487 67,175 7,646 2,092 559 521 794 295,6841995 10,250 23,961 205,278 44,098 7,285 2,743 1,085 969 4,624 290,0431994 7,130 37,791 164,685 45,273 6,075 1,967 669 606 2,204 259,2711993 8,028 45,994 142,847 39,270 5,269 1,706 580 526 1,912 238,1051992 8,889 12,115 118,528 32,584 4,372 1,416 481 436 1,587 171,5201991 12,083 9,247 90,468 24,870 3,337 1,081 367 333 1,211 130,9151990 4,593 7,183 70,279 19,320 2,592 840 285 259 941 101,7001989 4,676 5,776 56,509 15,535 2,085 675 230 208 756 81,7731988 2,750 4,962 48,544 13,345 1,791 580 197 179 650 70,2471987 2,065 4,510 44,121 12,129 1,628 527 179 162 591 63,8471986 1,593 4,198 41,072 11,291 1,515 491 167 151 550 59,4351985 1,676 3,614 35,363 9,722 1,304 422 144 130 473 51,173Source: Own elaboration on figures of INFOR.

Just as it was warned in point f) of the assumptions and premises, the information registered byINFOR on the Inventory of Plantations of Eucalyptus sp. is complete- age range- only for theyears 1995 and 1996. The remainder of the figures is esteemed.

In order to have a global vision of the evolution of the planted surface of Eucalyptus sp. in theperiod 1985-1996, the following figure is introduced.

Figure 4Planted Surface of Eucalyptus sp.

1985 - 1996

0

100.000

200.000

300.000

1985 1987 1989 1991 1993 1995

Years

Hectares

22


4.3.2 Volumetric Growth of Eucalyptus Sp.

The Mean Annual Increment for Eucalyptus sp. is of 22 cubic meter per hectare/ year.And corresponds to the average pondered of the registered outputs for all of the country.

4.3.3 Prices

In order to calculate the Actual value of the Eucalyptus sp. forest resource, the on the site costsof wood was utilized. This, to their time, was determined from the costs of wood put in factory,to who the expenses for concept of discharge and patio, transport from the forest until the plantand hauling were discounted.

Table 8On The Site Price Calculation

(US$/m3)Items Eucalyptus

sp.Put on fabric 63Discharge & patio -4Transport (forest – mill) -17Hauling -3On the site price 39Harvest -7Road construction -2Standing forest price 30Source: Elaboration on figures of the INFOR

4.3.4 Cost of on Site Production of 1 m3 Eucalyptus Sp.

In order to calculate the cost of on site production of an hectare of Eucalyptus sp., the followingitems were considered: Establishment of the Plantation, Fire prevention maintenance,Administration, Protection and Road Construction.

In order to determine the average cost of on site production of 1 m3 of wood, the followingassumptions were taken in consideration:

• Growth equivalent to 22 m3/ ha/ year. This is calculated for a representative site, to thelevel of all the country, of the plantations growth.

• The final objective of forestation is to produce pulp wood.

• It is estimated an average final extraction equivalent to a volume of 264 m3/ ha.

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Table 9Cost of Production of Eucalyptus Sp.

Establishment 524 US$/haHarvest 7.00 US$/m3

Road construction 2.00 US$/m3

Fire prevention maintenance 1.36 US$/m3

Administration and Protection 0.89 US$/m3

Source: Own elaboration on figures of the INFOR

Cost of Establishment.

The cost of establishment varies according to the initial considerate density and includes thefollowing tasks: Underbrush clearance, burning, fencing, soil preparation, fire prevention,plantation, control of overgrowths and/ or rodents and fertilization.

The initial value of the establishment of the plantation in the year zero, according to INFOR, is of524 US$/ ha.

Cost of Harvest.

It includes: Cutting, logging and encampment installation.The utilized cost of harvest is 1,848 (US$/ ha) and you/he/she/it return 7 US$/ m3. Applying anoutput of 264 m3/ha.

Fire Control Maintenance.

The annual cost is of 19 US$/ ha/ year. the Future Value of this annuality was calculated, for aperiod of 12 years and to an annual interest rate of the 7.97%. So the result is of 359.92 US$/haand it is equivalent to 1.36 US$/ m3.

Administration and Protection

Includes : Surveillance, supervision, minor maintenance, insurance against fire and disasters,plague control labors, and fire fighting.

The cost of Administration and Protection are, according to INFOR, of 12.4 US$/ha/year. theFuture Value of this annuality was calculated for a period of 12 years to an interest rate of the7.97%. The result is of 234.9 US$/ha and equals to 0.89 US$/ m3.

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25


5 ANTECEDENTS OF THE CHILEAN FOREST SECTOR.

5.1 Introduction

Chile has 75.4 million hectares of continental LAND.

The forests cover 15,647,894 hectares, which represents 20.8% of the national territory.32.5% of the territory are deserts (naked areas) and 27.2% are covered with prairies andbrushes.

The current land use is detailed in the following board:

Table 10Current Land Use

Hectares %Urban and industrial areas 181,420 0.2Agriculture land 3,805,784 5.0Prairies and brushes 20,506,615 27.2Forests 15,647,894 20.8Water (Rivers, lakes, etc 4,496,071 6.0Naked areas (deserts) 24,529,190 32.5Snow 4,641,730 6.2Bodies with no water 1,211,579 1.6Not recognized areas 388,753 0.5TOTAL 75,409,035 100.0Source: Chilean Native Vegetation Resources Inventory and Evaluation. Project of CONAF-CONAMA-

BIRF. 1998

The native forest reaches to 13,443,316 hectares, which represents the 17.8% of thenational surface. The most abundant forest is the adult, and represents 38.2% of the forestsurface. According to this Inventory, the Forest Plantations are of 2,118,836 hectares whichequal 13.5% of the forests and 2.8% of the national surface.

These figures on plantations are 282,851 hectares over the ones registered by INFOR. Inthis inventory, in order to get the graphic information around 47,000 air photographs and 35satellite photographs (for the covered zones to scale 1: 250.000) were interpreted. Thispractically covered the entirety of the national territory, with exception of the oceanic islandsand the Antarctic territory. Only 0.5% of the continental land could not be covered with thistype of image. The inventory also has all the information obtained directly on the site, in threeyears of work, with more than 3,600 journeys in the field.

This newly information of January 1998, suggest that the realized calculations overplantations, in this report, would be relatively overvalued. However, it does not subtract valueto the conclusions in relation of the evolution of the Appreciation of the Natural Capital.

The forests plantations, according to INFOR and their projections, for the year 1996 covers1,835,985 hectares. From this total, 1,387,041 ha are of Pinus radiata (75.6%); 308,762 haof Eucalyptus sp. (16.8%) and the remainder of Other Species (7.6%).

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5.2 Development of the Chilean Forestry Sector.

The development of the Chilean forest is essentially based in the exploitation of the Pinusradiata. Original of the peninsula of Monterrey, the specie was introduced in Chile some 100years ago, where, due to the special climatic and soil conditions, it grows to very superiorrate to than in its place of origin.

This development has wakened up many interest in the informed circles of the forest industryof the world. Its bases are found in two big landmarks intimately related:

a) A model of economical development open to the international market: Opening tothe worldwide market and deregulating the economy.

b) A model of forest development based on plantations: For over than four decades thediverse governments have affected directly or indirectly in the forestation andreforestation of the country by means of direct incentives - payment on behalf of thecost of planting and managing - and indirect – tributary profit and other tools ofeconomic politics - to the forests plantations.

The outputs of this forest politics, expressed essentially in the Ordinance Law 701 of 19744,of incentive to the development of the private plantations, was expressed in an extraordinarygrowth of the species Pinus radiata d. Don, capable of supplying the primary forest industryand generate 85% of the production value, harvesting it annually more than 18 million m3.Besides creating a net value of primary production equivalent to 2,400 million dollars, ofwhich 63% constitute the export offer of forests products of the most diverse nature, fromsaw wood to furniture and products added value.

The market for the forester is transparent, in the sense that relies on an information of well-known costs, with different barriers and power of negotiation, opposite the old industry.Consequently, the variables of offer and demand reflects, given the liberty of export, theinternational costs for logs.

In the recent trajectory of the forest sector, one could mention that the country in the decadeof the 70’s and 80’s was a wood producer, leader in the low cost production and whichoffered to the industry or to the external market, costs comparatively lower than those of thecountries with more forest development.

This situation changes starting from the 90’s, almost duplicating the real costs for the localindustry, small and medium companies with obsolescent technology didn't succeed inoffering products of a good relationship price -quality to the market, since their costs ofsupply were too high without getting the margins in order to sustain the sawing businessbecause of the low output that they where getting from the prime material.

The anterior is produced by the setting in progress of numerous projects of great size,especially in the area of the mechanical remake of wood, adding to this problem the effect ofthe boost of internal productive costs next to a strong lowering off the currency exchangerate5.

The expectations of costs for the forester improved substantially. The trajectory that the realcost followed was reflected perfectly in the cost of purchase of the countries with high forestdevelopment.

The previously commented meant a stimulus so that the forester (re forester) enters to thebusiness of forest plantations.

27


However, Chile has come losing its comparative advantages, between other causes, for thementioned overprice of its productive factors. This new situation is obligating that thepreviously commented model enters in a phase of strategic change in order to establish newcompetitive advantages and elevate the development curve through technologicalinnovation.

On the other hand, it is an important precedent that the property of the forests and the forestlands – native or plantations - are, in their majority, of private property.

The State is proprietor of 14 million hectares that are under the SNASPE6 (13% are naturalforests and the remainder are deserts, steppes, glacial and high mountain. The State alsohas 1.8 million hectares not belonging to the SNASPE, which are distributed in areas ofprotection, sanctuaries of nature, genetic reservations and places of scientific interest.

As for artificial plantations, the State now possesses some 42 thousand hectares of Pinusradiata that is administered by the National Forest Corporation (CONAF) in agreement withparticulars.

5.3 Reforestation and Forestation.

Reforestation is the plantation on the harvested of a forest. The regulations demand that allharvested forest be replanted in the term of 3 years.

For their part, forestation refers to the plantation carried out in lands that didn't have forestsand they were dedicated to other uses.

The surface forested and reforested with the species Pinus radiata and "other species"7 forthe period 1978-1996 are shown in the following table:

Table 11Reforestation and Forestation According to Year.

1978 - 1996(In Hectares)

YEAR TOTAL (1) PINUS RADIATA OTHER ESPECIES(%) (%)

1978 77,371,0 65,413,0 84.5 11,958,0 15.51980 72,164,0 60,086,0 83.3 12,078,0 16.71985 96,278,0 80,630,0 83.7 15,648,0 16.31990 94,130,0 61,310,0 65.1 32,820,0 34.81991 117,442,0 75,416,0 64.2 42,026,0 35.81992 130,429,0 81,868,0 62.8 48,561,0 37.21993 124,704,0 71,411,0 57.3 53,293,0 42.71994 109,885,0 63,061,0 57.4 46,824,0 42.61995 99,857,0 62,723,0 62.8 37,134,0 37.21996 78,592,7 53,444,0 68.0 25,148,8 32.0

Source: CONAF

(1): Includes forestation and reforestation, with exception of natural regeneration.

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5.4 Plantations of Exotic Species

The plantation of exotic species, initiate more than six decades, have had a sustained growththrough time, which has permitted that in the year 1996 registers a total of 1.8 millionhectares, of the whom, 75.9% are Pinus radiata; 16.6% are Eucalyptus sp., and theremainder to other exotic species like Atriplex sp., Prosopis tamarugo, Pseudotsuga sp. andPopulus sp.

Table 12Distribution of Forestry Plantations for Specie by Region, 1996.

(In Hectares)REGIÓN TOTAL Atriplex sp. Prosopis

TamarugoProsopis

sp.Populus

sp.Pseudotsuga

sp.Other sp. Eucalyptus

sp.Pinus radiata

TOTAL 1,835,985 49,316 20,632 3,248 4,055 12,477 50,454 308,762 1,387,041Percentage 100,0% 2,7% 1,1% 0,2% 0,2% 0,7% 2,7% 16,8% 75,5%

I 24,491 5 20,624 3,207 - - 477 178 -II 602 - 8 14 - - 579 1 -

III 1,723 3 - - - - 890 829 1IV 54,695 49,115 - 20 12 - 2,750 2,143 655V 56,672 193 - 7 - - 4,763 35,856 15,853

RM 12,659 - - - - - 1,731 9,927 1,001VI 84,024 - - - 991 - 1,316 22,002 59,715

VII 347,349 - - - 2,227 5 2,295 16,400 326,422VIII 761,916 - - - 276 365 7,342 111,228 642,705

IX 302,840 - - - 299 6,239 3,636 67,994 224,672X 166,403 - - - 245 4,666 3,271 42,204 116,017

XI 22,561 - - - 5 1,202 21,354 - -XII 50 - - - - - 50 - -

Source: INFOR

It comes off of the table that the two principal species, Pinus radiata and Eucalyptus sp,,represent 92.5% of the total plantations,

5.5 Plantations of Pinus Radiata

The plantations of Pinus radiata constitutes the industrial base of the Chilean forestry sector,since they offer qualities that allow to destine them to a great variety of uses. In fact, onlyrepresenting 18.4% of the surface of productive forests, contribute 74.5% of the primeindustrial material, in 1996 the consumption was of 22.9 million m3 s.s.c8.

The planted surface and the equivalent volume of Pinus radiata, by region, in the year 1996is the following:

29


Table 13Pinus Radiata Plantations by Region: 1996

REGION SURFACE (ha) VOLUMEN (millions m3)TOTAL 1,387,041 198.3

IV 656 -V 15,853 2.0

RM 1,001 0.2VI 59,715 7.9VII 326,422 35.0VIII 642,705 103.4IX 224,672 35.5X 116,017 14.3

Source: INFOR, CONAF, COMPANIES

These plantations extend in the country, from the V to X regions, being the VIII region theone with the largest surface and volume, with a 46.6% and a 51.8% respectively.

Table 14Surface and Volume of Pinus Radiata Plantations by Age Class According to the Region:

1996AGE CLASS (years)

REGION TOTAL 0 1-5 6-10 11-15 16-20 21-25 26-30 31 >SURFACE (hectares)

TOTAL 1,386,385* 60,300 380,483 309,413 312,658 252,242 65,346 4,319 1,624V 15,853 655 3,610 3,159 2,832 2,327 2,085 833 352RM 1,001 - 12 - 124 865 - - -VI 59,715 936 18,162 9,259 12,937 15,274 2,801 227 119VII 326,422 20,043 92,363 74,187 85,340 36,979 16,703 593 214VIII 642,705 30,300 162,685 138,856 138,191 141,161 29,778 1,385 349IX 224,672 4,342 65,741 51,101 53,760 37,221 11,190 932 385X 116,017 4,024 37,910 32,851 19,474 18,415 2,789 349 205

VOLUME (thousands of m3)

TOTAL 198,295 - - - 66,473 95,915 32,293 2,528 1,086V 1,964 - - - 362 505 640 308 149RM 216 - - - 16 200 - - -VI 7,867 - - - 1,808 4,754 1,129 108 68VII 35,026 - - - 14,108 12,137 8,269 359 153VIII 103,445 - - - 33,048 54,916 14,422 824 235IX 35,500 - - - 12,888 15,326 6,295 677 314X 14,277 - - - 4,243 8,077 1,538 252 167

Source: INFOR, CONAF, COMPANIES* Partial figures at national level ( the I , II, III and IVregions are excluded).

According to the outputs of a study carried out by the INFOR in the year 1990, 40% of theplantations of Pinus radiata are subjected to intensive forestry. This supposes the productionof plants from genetically improved seeds, the utilization of highly technified nurseries, theadequate soil preparation, the use of fertilizers and pesticides and the application of thinningand pruning produce wood free of knots. It, in consequence, is estimated that, in the nextyears, wood of good quality will be produced at better costs.

This intensive management is specially carried out by the big forest companies, with the endof getting a better quality of the wood. This permitted that Pinus radiata could be utilized inproducts that before were elaborated with other wood, like for example boards and pieces

30


free of knots. The companies and diverse organizations of government like the NationalForest Corporation, universities and the Forest Institute, also work in the geneticimprovement in order to increase the productivity of the forests lands.

On the other hand, traditional forestry exists. This is practiced in the 38% of the plantationsand is characterized by carrying out only two thinnings - at 12 and 16 years - and destine thecrops toward pulp wood and saw logs.

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5.6 Costs

The series of costs are expressed in real terms and in dollars.

To deflect the market values, internal and external, an Index of Prices for Majority is utilized,for Chile and the USA respectively.

Table 15Real Prices for Logs of the Species Pinus Radiata

Internal Market and Exportation(In US$/ m3)

EXPORTATION INTERNOYEAR P. radiata P. radiata

P/SAWLOG

P/PULP P/SAWLOG

P/PULP

1986 44 36 48 371987 49 34 48 361988 54 33 60 311989 50 31 58 301990 54 36 49 281991 57 44 49 271992 52 44 50 291993 92 41 48 231994 68 49 45 201995 69 45 45 221996 66 52 44 201997 61 56 45 21

Source: INFOR

5.7 Volumetric Growth

The rapid growth and high annual production volume, have been important factors in thegreat quantities of the Pinus radiata plantations. However, these qualities show variations inthe different zones of the country. So, the zone of Arauco presents the higher rates ofannual volumetric growth, in several classes of sites, in the other hand, the zone of Arenales(County of Biobío) shows the lower volumetric growth.

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Table 16Annual Volumetric Growth of Pinus Radiata

by Zone and Site IndexZONE SITE

INDEXSITE INDEX/1

(m)VOLUMETRIC

GROWTH(m3/ha/year)

VII – Maule IIIIII

282420

25.323.521.7

VIII –ConcepciónArauco

IIIIII

322824

31.627.122.7

VIII –Arenales

IIIIII

201612

18.114.310.7

Source :INFOR, 1992.

/ 1: Indicator of the fertility of the soil, measured through the dominantstrees height at an specific age, in this case Pinus radiata 20 years old.

For the application of the model, according to what has been said, an average annualincrement of 25 m3/ha/ year is utilized. This value is the most representative at the nationallevel for the diverse soil and climatic zones of Chile.

5.8 Legal Property the Plantations

If the legal property of the plantations of Pinus radiata is classified according to surface,considering as big proprietors those that possess more than 1,000 ha; like mediumproprietors, between 100 1,000 ha and like small proprietors, those with less of 100 ha, then,we get a concentration of these plantations under the domain of big proprietors; mostlylocated in the VIII Region, around the great forest industry.

This is confirmed in Table 17.

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Table 17Surface Plantations of Pinus Radiata by the Size of Proprietor

According to RegionSIZE OF PROPRIETOR SURFACE (Ha)

REGION YEAR Big Medium Small

Surface(ha)

Nº Surface(ha)

Nº Surface(ha)

NºWithout

Information Total

V 1994 6,805,0 2 4,418,7 20 2,714,9 138,0 1,104,2 15,042,8VI 1995 32,752,8 12 17,861,3 56 8,665,5 335,0 1,233,2 60,512,8VII 1996 198,546,0 26 79,175,8 306 39,185,1 1,599,0 12,269,1 329,176,0VIII 1990 472,754,9 30 73,742,6 306 333,097,9 936,0 15,982,1 895,577,5IX 1991 115,754,8 15 46,932,2 180 21,729,3 956,0 2,729,3 187,145,6X 1991 69,282,4 6 12,625,3 53 7,893,2 307,0 1,626,9 91,427,8TOTAL 895,895,9 91 234,755,9 921 413,285,9 4,271,0 34,944,8 1,578,882,5

Category Big: more than 1,000 haMedium: from 100 to 1,000 haSmall: less than 100 ha

The proprietors of plantations reach to 5,283, from them, 91 proprietors concentrate 57% ofthe total planted surface and remainder 43% is distributed between medium and smallproprietors. Should be pointed out, in this context, that the classification between big,medium and small proprietors is arbitrary and practically not comparable with the worldwideforest industry. The five principals North American companies have more than 4 millionhectares each and on our bigger companies don't surpass the 500,000 ha.

The regions with less development forest industry show a more balanced distribution of theproperty of this resource, reflected in the proportions of plantations of Pinus radiata in handsof medium proprietors.

5.9 Harvest – Growth Balance of the Plantations

The balance of harvest - growth of the Chilean forests is positive. According to the evolutionof the forestation and reforestation appraisal and to the esteemed harvest in the lastdecades, the country has capitalized its forest resources, especially in the forestsplantations. The futures balance is expected to continue being positive, due to the growingavailability of wood.

The balance of Pinus radiata is favorable, since the annual availability in volume is superiorto the appraisal of annual harvest, including the industrial consumption of wood, theconsumption of firewood and the losses for blazes. However, a descent of the balancebetween the years 1990 and 1994 was observed, product of the important increments ofindustrial harvesting.

A qualitative improvement is also observed through intensive management, like theapplication of genetic improvement techniques and of silvic treatments.

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Table 18Harvest / Growth Balance of Pinus Radiata Plantations

1996Items Units Pinus radiata

Annual plantations ha/year 63,061Average annual growth m3/ha/year 201/

Total surface Ha 1,386,385Volumetric stock m3/ha/year 198,295,000Annual availability m3/year 27,727,700Annual harvest Ha -35,990

m3 -17,995,100Firewood consumption m3 -1,449,818Forest fires loses Ha -4,200

m3 -500,000Plague loses Ha -7,000

m3 -948,000Balance Ha 15,871

m3 6,834,7821/ INFOR considered, in this calculation, the inferior limit ofthe Average Annual Increments registered in Chile. Itshould be remember that for the calculation of theAppreciation was utilized 25 m3/ha/year to be morerepresentative.

The Balance for 1996 is positive and indicates the sustainability of Pinus radiata exploitation.

5.10 Future Wood Availability

The future wood availability has been calculated, for INFOR, by means of the application ofpredictive models.

Table 19Future Wood Availability of Standing Forest of Pinus Radiata Measured Every 3Years and Type of Product 1996-2016

(Million m3/ year)3 YEARS TOTAL Pinus Radiata

Subtotal Pulp Saw log1996 - 98 19.85 17.7 8.6 9.11999 - 01 26.45 22.2 9.3 12.92002 - 04 30.37 23.3 10.0 13.32005 - 07 31.39 22.9 9.6 13.32008 - 10 32.44 23.1 9.1 14.02011 - 13 32.88 23.1 8.8 14.32014 - 16 39.98 30.1 10.1 20.0

Source: INFOR

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The presented outputs obey to the criterion of projection of the Maximal Readiness NotFalling, which determines the maximal volume of wood that could be extracted and whosemagnitude is sustained in time. It is to say, all the wood is harvested in order to supply thecurrent industrial park plus the well-known projects, the remainder is the net available woodin order to sustain new investments.

In the case of the Pinus radiata, a classification between pulp wood and saw log becomesnecessary, which is based an the variable utilization index, according to diameters. In thepulp wood availability, the minor diameter are suppose to be utilized, it does not includepossible recuperation of refuses in the sawmills.

It should be pointed out that the anterior is an arbitrary division and rather obeys to itscustomary use in Chile, standing out now that the innovation in the sawmill industry and theyof the remanufacture allows to utilize diameters until 10 centimeters in order to produceremanufacture products of high quality.

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37


APPENDIX 1

Pinus Radiata, Radiata Pine, Insigne Pine, Monterrey Pine9

Pinus radiata is originally of the occidental region of the United States. It is a well-know forestspecies, since, in spite of having a very reduced natural distribution, it is planted in diversecountries of the world.

In its natural form, it grows in three zones of the California coast : Point Pinos, to the south ofMonterrey Hill Bay; On the coast of the district of Santa Cruz, from Año Nuevo until BigCreek, and near Cambria, along the coast of the district of San Luis Obispo. It is also foundin altitudes of 600 to 1,200 meters in the Mexican island of Guadalupe, in front of the coastof Baja California.

The climate in the zone of distribution is characterized by average annual rainfall of 424 to761mm., with winter regimen and comparative high humidity. The average temperatures areof 10°C in winter and 14°C in summer and the extreme absolute temperatures are of - 6.7°and 42°C. In no time there is snow, but there are some weak freezes in January. It is a treeof straight bole that could reach 30 to 50 meters of height and diameters of 1.5 meters.

In their place of origin, this species has secondary importance, but in other countries it is oneof the most important species, constituting extensive plantations in Chile, New Zealand,Australia, South Africa and Spain. For the first two countries constitutes the principal forestspecies, with a surface superior to 1,300,000 hectares in Chile and more than 800,000 inNew Zealand.

The success of this species is due to the rapidity of its growth in several types of soils and tothe diversity of uses of its wood. This species was introduced in Chile towards the end of thepast century, but the massive plantations only begun in the decade of the 40’s. In 1965 theplanted surface reached some 230,000 hectares and in 1984 arrived at one million ofhectares.

This resource has given origin to an important forest industry that produces pulp, paper, sawwood, diverse types of boards, furnishing, packaging and other products.

Pinus radiata is a species of great adaptability that has been utilized with success in theforestation from the V to the X Region. The best development of the species is achieved onthe coast of the VIII Region. It also achieved good growths in the volcanic floors of the PreAndes, up to altitudes of 800 meter.

Long periods of dryness, clay soils and the presence of snow, limits the distribution of thespecies.

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39


APPENDIX 2

Eucalyptus Globulus Sp. Globulus 10

Within its gender, Eucalyptus globulus sp. globulus is possibly the most well-known anddiffused species in the world because of its ease of establishment, rapid growth and multipleuses.

In favorable conditions, it reaches 70 meters of height and 2.3 meters of diameter, with astraight bole up to two third parts of its total height. It has a rough and continues bark in thelow part, which in the high parts comes off in long strips, leaving a flat surface of gray bluishcolor.

It grows on a wide range of soils, but is located especially over soils derived of granite rocks.Does not grow naturally in strongly calcareous or alkaline soils, neither occupies poorlydrained soils. It reaches its best developments in lime or somehow heavy soils, moderatelyfertile and with good drainage, but with adequate content of humidity.

This species has an extraordinary initial growth in height in favorable sites; for example 20meter in 4.5 years in Tanzania, 15 meters in 3 years and almost 30 meters in 10 years inIndia. In sites like Spain, Portugal, Italy, Peru and other places, they have registered outputsof 10 to 30 m3/ ha/ year. In Chile, it has been planted in a wide range of soil and climateconditions and presented outputs that go from the 5 to more than 40 m3/ ha/ year at 15 yearsof age.

Eucalyptus globulus sp. globulus is a species of multiple use. In Chile it has traditionally beenemployed in agriculture, used as posts of fences and vineyards; as firewood, it alreadypossesses a good heating power (4,800 kcal/kg.); in the fabrication of parquets, foils andlately has a great demand for the production of pulp and paper. This species has also a highcontent of cineol, oil that is extracted from the leaves. Their flowers produce nectar andpollen for honey of good quality. In Chile it is the species of eucalyptus that has been plantedthe most. Great part of the plantations has been carried out in the last 5 years and theirprincipal objective is the production of pulp. This species is recommended to be planted inthe coast zones with more than 600mm. of precipitation and free from severe freezing. Thespecies doesn't support temperatures inferior of - 4°C. Even if it could survive, their rate ofgrowth is strongly diminished.__________________________________________________________Endnotes1 Michael Linddal. Comments to the case studies (Brazil, Chile, Philippines and Zimbabwe) for the

FAO report: ‘Environmental and Economic Accounting for Forestry’. Appendix for Chilean casestudy - and in general. June 8, 1998.

2 Indicator of the soil fertility, measured through of the high of the dominant trees at an specific age,Pinus radiata of 20 years.

3 These means that each years registered plantations corresponds to those that are really standing.In other words, does not includes harvested hectares nor includes hectares loss by forest fires orplagues.

4. This Ordinance Law has for objective to foment the forestation of forest soils, ensure thereforestation of harvested forests, rationalize the process of logging and stimulate the optimalmanagement of the forest resources. To do that, it pays 75% of the cost of plantation, it also givesa tributary benefit in favor of a lower Complementary Global Tax, expressed in the lowering of 50%of the taxes from outputs coming from the harvest and the exception of paying the Territorial Taxover the plantations.

5 However, the exchange rate has been gradually increasing at the end of 1997.6 National System of Protected Wild Areas, belonging to the State7 Eucalyptus sp. is not included in this category.

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8 Square meters with out bark.9 SOURCE. “Atlas Forestal de Chile”. CIREN-CORFO-INFOR. Publication CIREN-CORFO # 103.

Santiago de Chile, 1994.10 CIREN-INFOR (1994). Op. Cit.

APPRECIATION OF THE CHILEAN FOREST RESOURCE: … · 2 Appreciation of the Chilean Forest Resource:...

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