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Optimal rotation with differently-discounted benefit streams

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  • Price, C.

Abstract

The case is often now made that discount rates should decline with time. Underlying reasons include that some kinds benefit (or cost) might be discounted at a lower rate than that used for others : in particular, that rates for carbon values and environmental amenities might be less than that for timber. A lengthening sequence of rotations then arises, whether the benefits are consumptive ones realised at the rotation end, or non-consumptive ones whose annual value increases through the rotation. A timber discount rate lower than that for non-consumptive benefits leads to a shortening sequence of rotations. The results differ importantly from those of discounting at a reducing rate through time.

Suggested Citation

  • Price, C., 2014. "Optimal rotation with differently-discounted benefit streams," 2014, Number 45, May 22-24, 2014, Uppsala, Sweden, Scandinavian Forest Economics: Proceedings of the Biennial Meeting of the Scandinavian Society of Forest Economics, vol. 2014(45), pages 1-7, December.
    • Handle: RePEc:ags:ssfesf:199241
    DOI: 10.22004/ag.econ.199241
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    References listed on IDEAS

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    1. Hartman, Richard, 1976. "The Harvesting Decision When a Standing Forest Has Value," Economic Inquiry, Western Economic Association International, vol. 14(1), pages 52-58, March.
    2. Anthony C. Fisher & John V. Krutilla, 1975. "Resource Conservation, Environmental Preservation, and the Rate of Discount," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 89(3), pages 358-370.
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    Cited by:

    1. Brazee, Richard J., 2018. "Impacts of declining discount rates on optimal harvest age and land expectation values," Journal of Forest Economics, Elsevier, vol. 31(C), pages 27-38.

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