Assignment Instructions: e210_EconomicAppraisal_Assignment_Primer_Spring2024.docDownload e210_EconomicAppraisal_Assignment_Primer_Spring2024.doc

Assignment Article: e210_A2_Dixon_PalawanEconomic AppraisalDownload e210_A2_Dixon_PalawanEconomic Appraisal

Assignment Article 2: Schulze_Environmental Damages and Cost-Benefit AnalysisDownload Schulze_Environmental Damages and Cost-Benefit Analysis

Assignment Workbook: e210_A2_Economic_Appraisal_Spreadsheet_Yourname-1.xlsx

Answer these questions:

Based on the initial appraisal setup described above (before carbon sequestration is factored in), what is the best option for the community? What are the respective probability-weighted NPVs (at 5% discount rate)?

Evaluate the carbon sequestration calculated based on conventional logging methods: what is the total potential benefit over 10 years (probability-weighted NPV at 5% discount rate)?

Evaluate the carbon sequestration calculated using RIL methods, what is the total potential benefit over 10 years (probability-weighted NPV at 5% discount rate Option 3)? Why does the annual value increase for some of the initial years and remain constant for the final years?

Perform a sensitivity analysis around to see how a change in discount rate affects the total NPV of the project options. Fill out the table provided with total NPV for each option at discount rates from 0% to 16%. You will need a chart with three lines (smooth lined scatter plot) comparing NPVs to the discount rate.

Why is it important to compare options using net present value? What role does the discount rate play in the comparison of line items? Why does the choice of discount rate matter?

Why is the time period an important consideration when developing this type of assessment? In our case, how would a longer time frame (e.g., 20 years instead of 10 years) affect our decision? What if we used a shorter time frame of 5 years?

Now that you've run several scenarios, assuming that the scenario from question 6 is the best estimate of what the real valuation parameters are, what would you recommend to the government of Palawan? Why?