R. N. Bhattacharyya

A more general dynamic economic model of the optimal rotation of multiple-use forests☆

Abstract A deterministic optimal control model is presented for a multiple-use forest, with specific consideration given to provision and maintenance costs associated with a flow of nontimber values. A relatively simple relationship is found which determines the optimal rotation length for such a forest.

Stumpage Price Uncertainty and the Optimal Rotation of a Forest: An Application of Sandmo Model

The Faustmann model has played a key role in the determination of the optimal forest rotation. Faustmann developed a simple and deterministic competitive economic model, the objective of which was to maximize the present value of perpetual returns to the fixed factor, a unit of timberland [ 1 ]. The optimal rotation problem thus viewed is a timber management problem abstracting from any environment of uncertainty. This article considers an alternative model formulation that treats a forest resource operated under conditions of stumpage price uncertainty and forest owners with risk aversion. A modified Faustmanntype rule under conditions of stumpage price uncertainty is developed based on the theory of a competitive firm under price uncertainty developed by Sandmo [2]. The Sandmo model is then used to investigate the effects of an increasing risk on the optimal rotation age.