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Impacts on Economically Optimal Timber Rotations When Future Land Use Changes

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Abstract:

Based on a perpetual rotation assumption, changes in selected variables will have effects on the even-aged timber clearcut age (rotation) that maximizes net present value using the Faustmann formula. Alternatively, one can assume that landowners project a postharvest change in land use with a land value equal to or exceeding today's Faustmann value and that this future land value is independent of their assumed values for variables like annual costs, annual revenues, stumpage prices, and income taxes. In that case, the impact of changes in the foregoing variables on optimal rotations may be substantially greater, and sometimes in the opposite direction, compared to the standard Faustmann approach. Moreover, a higher estimated postharvest land value can shorten the optimal rotation. With a loblolly pine yield function, these rotation differences are demonstrated, using the standard, perpetual Faustmann formula and a rotation-end land use change adaptation with a fixed projected land value. Appendixes include mathematical verifications. The different interpretations depend on whether one considers the Faustmann land value as the land market value in a general equilibrium sense, or whether one takes the future market value of land as given and performs sensitivity analyses of alternative scenarios. Policy implications are difficult to assess without more research on landowner behavior. FOR. SCI. 47(4):520–525.

Keywords: Faustmann; Forest economics; environmental management; forest; forest management; forest resources; forestry; forestry research; forestry science; land value; natural resource management; natural resources; optimal rotation

Document Type: Miscellaneous

Affiliations: 1: Professor of Forest Economics Department of Forestry, Virginia Tech, Blacksburg, VA, 24061, Phone: 540-231-7267; Fax: 540-231-3698 david.klemperer@vt.edu 2: Professor of Mathematics Department of Mathematics, Virginia Tech, Blacksburg, VA, 24061, Phone: 540-231-4291 Farkas@vt.edu

Publication date: 2001-11-01

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

    Average time from submission to first decision: 62.5 days*
    June 1, 2016 to Feb. 28, 2017

    Also published by SAF:
    Journal of Forestry
    Other SAF Publications
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