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Stochastic Log Price, Land Value, and Adaptive Stand Management: Numerical Results for California White Fir

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Abstract:

This paper presents an adaptive management formulation for determining the timing and intensity of thinning and the time of clearcut for stands with any age structure and with stochastic log prices. In contrast to previous timber management studies with stochastic prices, the formulation allows the determination of the best time to switch from forestry to another land use or from selection harvesting to plantation forestry. Harvests are determined with a piecewise linear function that relates harvest intensity and stand value. The parameters of the function include its slope, location, and length. Optimal parameter values are determined using stochastic simulation. Delivered log price is a stationary process that is the sum of a deterministic constant and a normally distributed random error. Numerical results are presented for young and mature stands of California white fir [Abies concolor (Gord. & Glend.) Lindl. (Iowiana [Gord.])]. The results include when to terminate forestry and switch land use. The expected time of clearcut is inversely related to the bare land value. The effect of price variation on the time of clearcut depends on land value. For low land values, increasing price variation decreases the expected time of clearcut; for high land values, the effect of price variation is reversed. The results include estimates of the relative economic efficiency of plantation versus uneven-age forestry. The size of trees in the initial stand rather than price variation phys the critical role in determining the relative economic returns. Because the results are dependent on the assumption that the price process is stationary, caution should be used in extending the results beyond the case presented here. For. Sci. 37(5):1224-1238.

Keywords: Abies concolor; Forest management; decision-making under risk; optimal harvesting

Document Type: Journal Article

Affiliations: Research Forester, USDA Forest Service, North Central Forest Experiment Station, 1992 Folwell Ave, St. Paul, MN 55108

Publication date: 1991-11-01

More about this publication?
  • Forest Science is a peer-reviewed journal publishing fundamental and applied research that explores all aspects of natural and social sciences as they apply to the function and management of the forested ecosystems of the world. Topics include silviculture, forest management, biometrics, economics, entomology & pathology, fire & fuels management, forest ecology, genetics & tree improvement, geospatial technologies, harvesting & utilization, landscape ecology, operations research, forest policy, physiology, recreation, social sciences, soils & hydrology, and wildlife management.
    Forest Science is published bimonthly in February, April, June, August, October, and December.

    2015 Impact Factor: 1.702
    Ranking: 16 of 66 in forestry

    Also published by SAF:
    Journal of Forestry
    Other SAF Publications
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