Feedback Thinning Policies for Uneven-Aged Stand Management with Stochastic Prices
Abstract:This paper presents an optimization model and a numerical method for determining feedback thinning rules for uneven-aged stand management when the stumpage price forecast is a stochastic process. Periodic thinning takes place over a finite time horizon, and the objective is to maximize expected present value. The thinning rules are based on a continuous function that maps the relationship between harvest intensity and observed stand value. The parameters of the function include its slope, location, and shape. The location parameter is defined as the stand reservation value, which is the minimum stand value required for harvest. Optimal parameter values are determined using stochastic simulation. Numerical results are presented using a stage-structured model for uneven-aged stands of California white fir (Abies concolor [Gord. & Glend.] Lindl. (Iowiana [Gord.])). Stumpage price is the sum of a deterministic constant and a normally distributed random error. With these assumptions, optimal feedback thinning policies have significantly higher expected present values than do thinning policies that ignore price fluctuations. However, feedback policies have greater volatility in harvest revenue over time. Sensitivity analysis shows that the expected present value of optimal feedback management increases as the level of price risk increases. For. Sci. 36(4):1015-1031.
Document Type: Journal Article
Affiliations: Research Forester, USDA Forest Service, Southeastern Forest Experiment Station, Box 12254, Research Triangle Park, NC 27709
Publication date: December 1, 1990
More about this publication?
- Membership Information
- ingentaconnect is not responsible for the content or availability of external websites