What is Tigermoth?
What does it do and what is the purpose of the software...

Forests are complex. Successful forest management and forest investment depends on clearly understanding and accurately communicating this complexity.

The Tigermoth software provides users with a standardized forest estate description and optimization framework for understanding and valuing forest assets. It is used for describing, forecasting and analyzing the results of forest management strategies.

Forest owners, managers, investors, financiers and independent appraisers need to be able to readily and clearly understand the assumptions that underpin forest value. The purpose of the software is to provide this clarity.

The software provides a consistent framework for forestry data, allowing the use of both continuous and integer constraints to produce a forest estate model that can then be optimized.

The solution of the optimization model is used to determine future wood flows and cash flows, and understand key metrics of the forest estate such as the net present value (NPV) of the individual forest assets.

Purpose of the Software

Tigermoth is a forest estate modelling framework that has been designed to standardize forest estate description, optimization, valuation and compliance with financial reporting standards.

Forest estate modelling with optimization has been widely practiced since the 1970s and is well documented in many academic journals and publications (see Dykstra, Dennis P. c1984, Mathematical Programming for Natural Resource Management, ISBN 0-07-018552-2).

Forest estate models provide the means to explore forest management options from a “top-down” approach – that is, the performance of the whole forest resource can be examined at once. Such systems may offer either optimization or simulation options or both. They allow the modelling of short, medium and long term forest wood flows. While in the first instance they are based on physical parameters associated with the forest – such as area and wood volume, they readily incorporate financial parameters. The latter are essential in identifying management strategies that are economically optimal.

Forests are complex investments. Success depends on being able to measure the value of a forest at the time it is acquired and forecast its value accurately at the time it is sold. In between times, investors need to be able to manage and operate their forests with a full appreciation of how their choices and decisions will impact their investment.

Often, this information needs to be communicated to third party groups. The Tigermoth modelling system gives investors in forest assets the ability to report on their operations with transparency, building confidence and trust among stakeholders.

Software Design Goals

The software has been developed to achieve a series of fundamental design goals. These are:

  1. The use of Microsoft Excel for all standard input and output requirements

  2. All forest description and management information to be held in a single workbook

  3. Avoidance of any type of cryptic or free-form ASCII text file formats

  4. Use of a normalized SQL database structure with a published schema

  5. The provision of Microsoft Excel valuation reporting and solution analysis templates

Components of the System

The Tigermoth modelling system consists of three components:

  1. Standard Forest Description - Microsoft Excel data input workbook in a standard format.

  2. Optimization and Analysis - Bespoke interface of the linear programming engine.

  3. Valuation and Reporting - Microsoft Excel valuation reporting workbook templates.

Standard Forest Description

The standard forest description (SFD) is a single, stand-alone Microsoft Excel workbook. The workbook contains a series of worksheets that hold the data needed for a forest estate model and forest asset valuation.

The standard forest description workbook can be most easily understood by considering it as a biological balance sheet. It is a forest owner's best understanding of their existing forest assets at a particular point in time, being the date of the forest description.

The workbook has been designed to be easily understood and audited, and includes:

  1. Physical Forestry Asset Information

  2. Alternatives for Managing the Current Rotation

  3. Alternatives for Replanting the Future Rotations

  4. Harvest Planning and Wood Flow Management

  5. Log Market Logistics and Allocation

The forest description workbook has been organized so that the worksheets flow from the physical forest data such as age and area on the left, through growth, yield, operational management, usage and finally market allocation and revenue on the right.

A full example of the standard forest description (SFD) in Microsoft Excel format can be downloaded and examined from the following link. Note that all possible worksheets are shown in this example, whereas smaller models do not need all worksheets to be present.

Download an example of the Standard Forest Description workbook

Optimization and Analysis

The concepts behind formulating linear programming and mixed integer programming problems consist of four basic components:

  1. Decision variables representing the quantities to be determined,

  2. An objective function representing how the decision variables affect the value to be optimized,

  3. Constraints representing how the decision variables consume limited resources, and;

  4. Data that quantifies the relationships in the objective function and the constraints.

In a linear program, the objective function and the constraints are linear relationships, meaning that the effect of changing a decision variable is proportional to its magnitude. This provides a powerful and robust analytical methodology for supporting fact-based decision making.

The standard forest description in Microsoft Excel workbook holds all the data necessary to formulate the decision variables, constraints and objective function of a mathematical optimization problem that can be solved using a commercial linear programming (LP) optimizer.

The entire forest estate is optimized over (say) 70+ years, while adhering to the forest management options and market constraints supplied in the standard forest description. The objective function is set to maximize the net present value (NPV) of the entire forest estate.

Once an optimal solution to the forest estate model has been determined, the results can be interpreted and presented for analysis. Typically the wood flows that are forecast to arise over the 70+ year horizon of the model are shown graphically so that users can quickly interpret the results.

Functionality is provided by the software interface so that users can drill-into more detailed levels of the wood flows and cash flows components, either graphically or in a tabular grid as shown below.

Users can then add, remove and change constraints and the forest estate model can be re-optimized to produce a new solution consistent with the requirements of the new constraints.

Valuation and Reporting

Solution analysis within the interface has been designed to enable users to quickly develop alternative modelling scenarios to arrive at increasingly refined solutions. Users can then extract the results of the forest estate model into more detailed and comprehensive Microsoft Excel valuation and reporting templates.

The reporting templates have been designed to be used across all forest estates and to quickly extract and consolidate the solution into a standardized reporting format. Users are free to change and alter the templates as they may require.

The standard types of Microsoft Excel templates that are provisioned by the software cover:

  1. Physical forest metrics and measures such as wood flow, age, area and forest growing stock

  2. Specialized forest valuation templates of varying degrees of complexity

  3. Carbon sequestration templates for reporting changes in forest estate carbon stocks

  4. 'Spread-Back' templates for assigning forest value across discreet components of the estate

An example of a simple template that reports forest estate wood flow, the average age of harvesting, forest area, growth measures and annual changes in forest growing stock can be downloaded and reviewed from the following link.