The Effect of Stumpage Rates on Timber Recovery
Governments often sell the right to harvest timber on public land. If timber is of heterogeneous quality and timber pri ces reflect this heterogeneity, then charging a fixed stumpage rate per cubic meter of timber harvested independent of timber quality can induce the economically inefficient practice of harvesting only the best grades of timber, "high-grading." Charging a lump sum that is independent of the volume of timber harvested yields the efficient choice of minimum timber quality. With competitive bidding, the lump-sum scheme extracts all of the resource rent while the stumpage rate scheme leaves some rent in the forest.
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Volume (Year): 26 (1993)
Issue (Month): 1 (February)
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