Optimal Timber Rotations with Evolving Prices And Costs Revisited
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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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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