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The Economics of Timber: A Renewable Resource in the Long Run

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  • Peter Berck
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    Abstract

    Critics of current and historical trends in timber production contend that private owners cut their woods more quickly than optimal while public managers cut their forests more slowly than optimal. Using the Douglas fir industry, this paper shows that private entrepreneurs holding rational expectations with respect to future prices have historically been discounting the future at a real rate of 5 percent -- a much lower rate than that available for other private investments -- and, therefore, that these owners have not cut their forests prematurely. In the case of public management, calculated shadow losses incurred by holding old timber are so great that an appeal to nontimber use values is not sufficient to reconcile management practices. Finally, predictions for the long-term price trends for timber indicate a slowdown in the rate of price increase.

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    Bibliographic Info

    Article provided by The RAND Corporation in its journal Bell Journal of Economics.

    Volume (Year): 10 (1979)
    Issue (Month): 2 (Autumn)
    Pages: 447-462

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    Handle: RePEc:rje:bellje:v:10:y:1979:i:autumn:p:447-462

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    Cited by:
    1. Gardner M. Brown, 2000. "Renewable Natural Resource Management and Use without Markets," Journal of Economic Literature, American Economic Association, vol. 38(4), pages 875-914, December.
    2. Berck, Peter & Bentley, William R., 1987. "Hotelling's Theory, Enhancement, and the Taking of the Redwood National Park," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt4p805216, Department of Agricultural & Resource Economics, UC Berkeley.
    3. Ando, Amy, 1997. "The Price-Elasticity of Stumpage Sales from Federal Forests," Discussion Papers dp-98-06, Resources For the Future.
    4. Vincent, Jeffrey R & Gillis, Malcolm, 1998. "Deforestation and Forest Land Use: A Comment," World Bank Research Observer, World Bank Group, vol. 13(1), pages 133-40, February.

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