Debunking the forest rent model fallacy in a fully regulated forest
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In this paper, we first show both mathematically and empirically that the forest rent model is the wrong model to determine the optimal rotation age of a fully regulated forest as long as the standing timber has value. We then demonstrate that even if the forest is acquired for free, a fully regulated forest based on the forest rent model is actually worth more than the present value of its annual income. By converting to a fully regulated forest with a shorter rotation under the land expectation model, a higher present value of over 10% can be realized.
Research of the first and third authors supported in part by the McIntire-Stennis Cooperative State Research Program. Research of the second author supported in part by The Natural Science Foundation of Jiangsu Province (Grant No BK20140980). Approved for publication by the Director of the Louisiana Agricultural Experiment Station as manuscript Number 2018-241-32241.
The funding was provided by National Institute of Food and Agriculture (Grant No. LAB94315), the Natural Science Foundation of Jiangsu Province (Grant No. 20140980).
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