Economics and Management of Industrial Forest Plantations

  • Luis Diaz-BalteiroEmail author
  • Carlos Romero
  • Luiz C. E. Rodriguez
  • Silvana Ribeiro Nobre
  • José G. Borges
Part of the Managing Forest Ecosystems book series (MAFE, volume 33)


This chapter deals with the basic principles underlying the optimum economic management of the industrial forest plantations. With this purpose the presentation will start with the introduction of basic concepts of the investment analysis, which will serve as a basis for explaining the tools most usually employed for analysing the profitability of this kind of investments. After this, the concept as well as the optimum economic determination of the forest rotation age will be analysed. Once the investment analysis and optimal forest rotation concepts have been reviewed, we focus in the basic aspects of forest valuation. Finally, an operations research technique used to optimize stand management planning decisions, as dynamic programming, will be shown.


Discount Rate Carbon Capture Land Rent Optimal Rotation Timber Price 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Amacher G (1997) The design of forest taxation: a synthesis with new directions. Silva Fenn 31:101–119CrossRefGoogle Scholar
  2. Amacher G, Brazee R, Thompson T (1991) The effects of forest productivity taxes on rotation age and initial stand investment. For Sci 37:1099–1118Google Scholar
  3. Amidon EL, Akin GS (1968) Dynamic programming to determine optimum levels of growing stock. For Sci 14:278–291Google Scholar
  4. Arthaud GJ, Klemperer WD (1988) Optimizing high and low thinnings in loblolly pine with dynamic programming. Can J For Res 18:1118–1122CrossRefGoogle Scholar
  5. Bettinger P, Boston K, Siry JP, Grebner DI (2009) Forest management and planning. Academic Press, BurlingtonGoogle Scholar
  6. Borges JG, Falcão A (1999) Programação dinâmica e gestão de povoamentos com estrutura regular e composição pura. Aplicação à Mata Nacional de Leiria. Revista Florestal XII(1/2):69–82Google Scholar
  7. Borges JG, Nordström EM,Garcia-Gonzalo J, Hujala T, Trasobares A (eds) (2014) Computer-based tools for supporting forest management. The experience and the expertise world-wide. SLU University Press (in press)Google Scholar
  8. Boulding KE (1935) The theory of a single investment. Q J Econ 49:475–494CrossRefGoogle Scholar
  9. Brodie JD, Adams DM, Kao C (1978) Analysis of economic impacts on thinning and rotation for Douglas-fir, using dynamic programming. For Sci 24:513–522Google Scholar
  10. Buongiorno J, Zhu S, Zhang D, Turner J (2003) The global forest products model. Structure, estimation and applications. Academic Press, San DiegoGoogle Scholar
  11. Campbell H, Brown R (2003) Benefit-cost analysis. Cambridge University Press, New YorkGoogle Scholar
  12. Chang S (1983) Rotation age, management intensity and the economic factors of timber production: do changes in stumpage price, interest rate, regeneration cost, and forest taxation matter? For Sci 29:257–277Google Scholar
  13. Davis LS, Johnson KN, Bettinger PS, Howard TE (2001) Forest management, 4th edn. McGraw-Hill, New YorkGoogle Scholar
  14. Diaz-Balteiro L, Rodriguez LCE (2006) Optimal rotations on Eucalyptus plantations including carbon sequestration – a comparison of results in Brazil and Spain. For Ecol Manag 229:247–258CrossRefGoogle Scholar
  15. Diaz-Balteiro L, Romero C (1994) Rentabilidad económica y turnos óptimos de choperas en España (Economic profitability and financial rotations of poplar plantations in Spain). Investig Agrar Sist Recur For 3:43–56Google Scholar
  16. Diaz-Balteiro L, Romero C (2001) Forest management and carbon captured: analytical aspects and policy implications. Investig Agrar Sist Recur For Fuera de Serie 1:153–165Google Scholar
  17. Falcão A (1998) DUNAS – a growth model for the national forest of Leiria. In: Proceedings of the IUFRO workshop empirical and process-based models for forest tree and stand growth simulation, Oeiras, 21–27 Setembro 1997Google Scholar
  18. Faustmann M (1849) Gerechnung des werteswelchenWaldbodensowienochnichthaubareholzbestäncefüe die Waldwirts-chafbesitzen. Allg Forst Jagdztg 25:441–455. English version: J Forest Econ 1995, 1:7–44Google Scholar
  19. Ferreira L, Constantino M, Borges JG (2011) A stochastic approach to optimize Maritime pine (Pinus pinaster Ait) stand management scheduling under fire risk. An application in Portugal. Ann Oper Res. doi: 10.1007/s10479-011-0845-z Google Scholar
  20. Ferreira L, Constantino M, Borges JG, Garcia-Gonzalo J (2012) A stochastic dynamic programming approach to optimize short-rotation coppice systems management scheduling. An application to eucalypt plantations under wildfire risk in Portugal. For Sci 58:353–365Google Scholar
  21. Fisher I (1930) The theory of interest. Macmillan, LondonGoogle Scholar
  22. Gamponia V, Mendelsohn R (1987) The economic efficiency of forest taxes. For Sci 33:367–378Google Scholar
  23. Götze U, Northcott D, Schuster P (2008) Investment appraisal. Methods and models. Springer, BerlinGoogle Scholar
  24. Gunn E (2005) A neuro-dynamic programming approach to the optimal stand management problem. In: Bevers,M, Barrett TM comps. Systems analysis in forest resources: proceedings of the 2003 symposium. General technical report PNW-GTR-656. U.S. Department of Agriculture, Forest Service, Pacific Northwest Research Station, Portland OR, pp 265–272Google Scholar
  25. Gunter JE, Hanley HL (1984) Essentials of forestry investment analysis. Oregon State University Bookstores, Corvallis, OR 97339Google Scholar
  26. Guo B, Peyron J-L (1995) Optimiser la sylviculture à lon terme des peuplements forestiers équiennes grâce au logiciel Sylopt. Rév For Fr nº sp. 120–130Google Scholar
  27. Haight RG, Smith WD (1991) Harvesting loblolly pine plantations with hardwood competition and stochastic prices. For Sci 37:1266–1282Google Scholar
  28. Haight RG, Brodie JD, Dahms WG (1985) A dynamic programming algorithm for optimization of Lodgepole pine management. For Sci 31:321–330Google Scholar
  29. Hallett JT, Díaz-Calvo J, Villa-Castillo J, Wagner MR (2011) Teak plantations: economic bonanza or environmental disaster? J For 109:288–292Google Scholar
  30. Hartman R (1976) The harvesting decision when a standing forest has value. Econ Inq 16:52–58CrossRefGoogle Scholar
  31. Healy MJ Jr, Bergquist K (1994) The sales comparison approach and timberland valuation. Apprais J 62:587–595Google Scholar
  32. Hoganson HM, Borges JG, Wei Y (2008) Coordinating management decisions of neighboring stands with dynamic programming. In: von Gadow K, Pukkala T (eds) Designing green landscapes. Managing forest ecosystems, vol 15. Springer, Dordrecht, pp 187–214Google Scholar
  33. Hotelling H (1925) A general mathematical theory of depreciation. J Am Stat Assoc 20:340–353CrossRefGoogle Scholar
  34. Hughell D (1991) Modelo preliminar para la predicción del rendimiento de Gmelina arborea Roxb. En América Central. Silvoenergía (C.R.) No. 44, pp 1–4Google Scholar
  35. IVSC (2013) The valuation of forests – exposure draft. International Valuation Standards Council, London. 29 pp.
  36. Johansson PO, Löfgren KG (1985) The economics of forestry and natural resources. Basil Blackwell, OxfordGoogle Scholar
  37. Kula E (1984) Derivation of social time preferences rates for the United Sates and Canada. Q J Econ 99:873–883CrossRefGoogle Scholar
  38. Kula E (1985) Derivation of social time preferences rates for the United Kingdom. Environ Plann A 17:199–212CrossRefGoogle Scholar
  39. Löfgren KG (1983) The Faustmann-Ohlin theorem: a historical note. Hist Polit Econ 15:261–264CrossRefGoogle Scholar
  40. Marco R (2011) Propuesta de incorporación del aprovechamiento trufero en el paraje de La Umbría, Codes (Guadalajara). Trabajo Fin de Carrera. ETS Ingenieros de Montes, Madrid (not published)Google Scholar
  41. Medema EL, Lyon GW (1985) The determination of financial rotation ages for coppicing tree species. For Sci 31:398–404Google Scholar
  42. Norstrom CJ (1975) A stochastic model for the growth period decision in forestry. Swed J Econ 77:329–337Google Scholar
  43. Ohlin B (1921) Till fragan om skogarnas omloppstid. EkonomiskTidskrift 22:89–113. English version, in J Forest Econ,1995 1:89–114Google Scholar
  44. Peak R, Neale B (2006) Corporate finance and investment decisions & strategies, 5th edn. FT Prentice Hall, LondonGoogle Scholar
  45. Pelkki M (1997) The effects of neighborhood storage size on dynamic programming solutions. For Sci 43:387–395Google Scholar
  46. Pressler MR (1860) Aus der Holzzuwachlehre (zweiterArtikel). Allg Forst Jagdztg 36:173–191. English version, in J For Econ 1995, 1:45–87Google Scholar
  47. Rodríguez LCE, Santos Bueno AR, Rodrigues F (1997) Rotações de eucaliptos mais longas: análise volumétrica e económica (Longer eucalypt rotations: volumetric and economic analysis). Sci For 51:15–28Google Scholar
  48. Rojas F, Arias D, Moya R, Meza A, Murillo O, Arguedas M (2004) Manual para productores de melina (Gmelina arbórea) en Costa Rica. FONAFIFO, San JoséGoogle Scholar
  49. Romero C (1997) Economía de los Recursos Ambientales y Naturales. Alianza Editorial, MadridGoogle Scholar
  50. Romero C, Ríos V, Díaz-Balteiro L (1998) Optimal forest rotation age when carbon captured is considered: theory and applications. J Oper Res Soc 49:121–131CrossRefGoogle Scholar
  51. Rose DW, Borges JG, Pelkki MH (1995) Forest management planning based on stand level decisions. North J Appl For 12(3):133–142Google Scholar
  52. Samuelson PA (1976) Economics of forestry in a evolving society. Econ Inq 14:466–492CrossRefGoogle Scholar
  53. Sen AK (1967) The social time preference rate in relation to the market rate of interest. Q J Econ 81:112–124CrossRefGoogle Scholar
  54. Tait DE (1986) A dynamic programming solution of financial rotation ages for coppicing tree species. Can J For Res 16:799–801CrossRefGoogle Scholar
  55. Téllez E, González M, De los Santos HM, Fierros AM, Lilieholm RJ, Gómez A (2008) Rotación óptima en plantaciones de eucalipto al incluir ingresos por captura de carbono en Oaxaca, México (Optimal timber rotation lengths in eucalyptus plantations including revenues from carbon capture in Oaxaca, México). Rev Fitotec Mex 31:173–182Google Scholar
  56. Wagner JE (2012) Forestry economics. A managerial approach. Routledge, New YorkGoogle Scholar
  57. Zamudio FJ, Romo JL, Cervantes JOA (2010) Evaluaciónfinanciera y de riesgo de una plantación forestal comercial en Zihuateutla, Puebla. (Financial and risk assessment of a commercial forest plantation in Zihuateutla, Puebla). Rev Chapingo 16:69–78Google Scholar
  58. Zinkhan FC, Sizemore WR, Mason GH, Ebner TJ (1992) Timberland investments. A portfolio perspective. Timber Press, PortlandGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  • Luis Diaz-Balteiro
    • 1
    Email author
  • Carlos Romero
    • 2
  • Luiz C. E. Rodriguez
    • 3
  • Silvana Ribeiro Nobre
    • 4
  • José G. Borges
    • 5
  1. 1.Departamento de Economía y Gestión Forestal, ETS Ingenieros de MontesTechnical University of MadridMadridSpain
  2. 2.ETS Ingenieros de MontesTechnical University of MadridMadridSpain
  3. 3.Department of Forest SciencesUniversity of São PauloSão PauloBrazil
  4. 4.Department of Forest ManagementAtrium Forest ConsultingSão PauloBrazil
  5. 5.Forest Research Centre, School of AgricultureUniversity of LisbonLisbonPortugal

Personalised recommendations