Optimizing Douglas-fir management in the U.S. Pacific northwest: Integrating timber prices, thinning strategies, and harvest age decisions

In this study, an optimal control model is developed to simultaneously determine the optimal thinning paths and harvest ages for Douglas-fir stands in the U.S Pacific Northwest, considering various thinning strategies, stochastic timber prices, and productivity conditions. The analysis generally indicates that a maximum of two thinnings is optimal for Douglas-fir across all productivity levels and price processes. Incorporating thinnings under stochastic timber prices results in significantly higher land values compared to unthinned Douglas-fir stands. For instance, with a fixed thinning rate, land values increase by 25.1 % ($330.8/acre) and 59.7 % ($1375.9/acre) under independent and identically distributed (iid) prices for low and high productivity levels, respectively. When thinning intensities are determined endogenously, land values rise by 108.1 % ($1426.8/acre) and 91.2 % ($2102.8/acre) with first-order autoregressive prices. The first-order autoregressive price process generally results in higher land values compared to the iid process. Both timber price models yield the same number of thinnings at the same ages; however, the thinning intensity is lower under the first-order autoregressive model when thinning rates are endogenously determined.