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Optimal Timber Rotations with Evolving Prices And Costs Revisited

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In this paper, we extend previous work that modeled the impact of evolving prices and costs to evaluate the full range of rotation length and input changes resulting from changing prices and costs. Our model suggests that if prices and costs change at the same rate, then production derisions are invariant. Any specific proportionate rate of change in prices and costs acts as an adjustment factor on the discount rate which corresponds to a constant rotation length. We also find that in the normal range of changes, namely, rates of any change less than the discount rate, the following results hold: if prices rise faster than costs, then the rotation length becomes shorter and establishment inputs increase; on the other hand, if costs rise faster than prices, then the optimal harvest age becomes longer and stand establishment inputs are reduced. These results not only extend and generalize those derived by McConnell et al. and Newman et al., but also further demonstrate the robustness of the Faustmann model. For. Sci. 41(3):477-490.
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Keywords: Faustmann; Timber production; dynamic optimization; uncertainty

Document Type: Journal Article

Affiliations: Associate Professor, Daniel B. Warnell School of Forest Resources, The University of Georgia, Athens, GA 30602-2152

Publication date: 1995-08-01

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    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.
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