Environmental and Resource Economics

, Volume 69, Issue 4, pp 713–732 | Cite as

Forest Value and Optimal Rotations in Continuous Cover Forestry

  • Jette Bredahl Jacobsen
  • Frank Jensen
  • Bo Jellesmark Thorsen
Article

Abstract

The Faustmann forest rotation model is a celebrated contribution in economics. The model provides a forest value expression and allows a solution to the optimal rotation problem valid for perpetual rotations of even-aged forest stands. However, continuous forest cover forest management systems imply uneven-aged dynamics, and while a number of numerical studies have analysed specific continuous cover forest ecosystems in search of optimal management regimes, no one has tried to capture key dynamics of continuous cover forestry in simple mathematical models. In this paper we develop a simple, but rigorous mathematical model of the continuous cover forest, which strictly focuses on the area use dynamics that such an uneven-aged forest must have in equilibrium. This implies explicitly accounting for area reallocation and for weighting the productivity of each age class by the area occupied. We present results for unrestricted as well as area-restricted versions of the models. We find that land values are unambiguously higher in the continuous cover forest models compared with the even-aged models. Under area restrictions, the optimal rotation age in a continuous cover forest model is unambiguously lower than the corresponding area restricted Faustmann solution, while the result for the area unrestricted model is ambiguous.

Keywords

Capital budgeting Faustmann rotation model Uneven-aged forest management 

JEL Classification

Q23 

Notes

Acknowledgements

We would like to than Colin Price and Finn Helles for constructive commenting on several previous versions of this paper, helping clearing the thoughts and for continuously urging us to finalize it. Furthermore, we would like to thank participants on the Fifth World Congress of Environmental and Resource Economists 2014 and the Biennial meeting of the Scandinavian Society of Forest Economics 2014 for comments on an earlier version of the paper. Jette Bredahl Jacobsen and Bo Jellesmark Thorsen acknowledge support from the Danish National Research Foundation to the Center for Macroecology and Climate.

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Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  1. 1.Department of Food and Resource Economics, Faculty of ScienceUniversity of CopenhagenFrederiksberg CDenmark
  2. 2.Centre for Macroecology, Evolution and Climate, Faculty of ScienceUniversity of CopenhagenFrederiksberg CDenmark

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