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Discount Rate and Timber Rotation: the Case of Eucalyptus Saligna

Author

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  • Camilo Restrepo
  • Mauricio Alviar

Abstract

Eucalyptus is one of the most important economical and environmental species in Colombia. The main goal of this article is to study the relationship between the discount rate and the year of Eucalyptus Saligna optimal harvest, through the Fisher and Hotelling’s method. The methodology consists of calculating the maximum Net Present Value and performing a sensitivity analysis between the year of harvest and the discount rate. The area of study is located in the eastern region of the state of Antioquia, where data was available. The results suggest that the optimal year of harvest has an inversely proportional relation with the discount rate, and it decreases for higher rates.

Suggested Citation

  • Camilo Restrepo & Mauricio Alviar, 2010. "Discount Rate and Timber Rotation: the Case of Eucalyptus Saligna," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 73, pages 149-164.
  • Handle: RePEc:lde:journl:y:2010:i:73:p:149-164
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    File URL: https://revistas.udea.edu.co/index.php/lecturasdeeconomia/issue/view/810
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    More about this item

    Keywords

    Net present value; year of harvest; discount rate; optimal rotation; eucalyptus; Colombia;
    All these keywords.

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry

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