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Economics of rotation and thinning revisited: the optimality of clearcuts versus continuous cover forestry

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  • Tahvonen, Olli

Abstract

A continuous time-economic model for optimal thinning and rotation is modified to include natural regeneration. The respecified model is capable of describing both optimal forest rotation and continuous cover forestry (uneven-aged management). Continuous cover forestry is shown to be optimal if the preset value of continuous sustainable harvesting income over an infinite horizon is higher than the clearcut revenue and the highest possible value of bare land. Negative bare land value implies optimality of continuous cover forestry but only if clearcut stumpage prices are not higher than thinning stumpage prices. Given low interest rate optimized thinning is shown to increase rotation length.

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  • Tahvonen, Olli, 2016. "Economics of rotation and thinning revisited: the optimality of clearcuts versus continuous cover forestry," Forest Policy and Economics, Elsevier, vol. 62(C), pages 88-94.
    • Handle: RePEc:eee:forpol:v:62:y:2016:i:c:p:88-94
    DOI: 10.1016/j.forpol.2015.08.013
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    References listed on IDEAS

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    1. Halbritter, Andreas & Deegen, Peter, 2015. "A combined economic analysis of optimal planting density, thinning and rotation for an even-aged forest stand," Forest Policy and Economics, Elsevier, vol. 51(C), pages 38-46.
    2. Olli Tahvonen, 2015. "Economics of Naturally Regenerating, Heterogeneous Forests," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(2), pages 309-337.
    3. Khazri, Olfa & Lasserre, Pierre, 2011. "Forest management: Are double or mixed rotations preferable to clear cutting?," Resource and Energy Economics, Elsevier, vol. 33(1), pages 155-171, January.
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    5. Chang, Sun Joseph & Gadow, Klaus V., 2010. "Application of the generalized Faustmann model to uneven-aged forest management," Journal of Forest Economics, Elsevier, vol. 16(4), pages 313-325, December.
    6. Binkley, Clark S., 1987. "When is the optimal economic rotation longer than the rotation of maximum sustained yield?," Journal of Environmental Economics and Management, Elsevier, vol. 14(2), pages 152-158, June.
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    Cited by:

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    2. Petri P Kärenlampi, 2019. "Wealth accumulation in rotation forestry – Failure of the net present value optimization?," PLOS ONE, Public Library of Science, vol. 14(10), pages 1-19, October.
    3. Patto, João V. & Rosa, Renato, 2022. "Adapting to frequent fires: Optimal forest management revisited," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    4. Sloggy, Matthew R. & Kling, David M. & Plantinga, Andrew J., 2020. "Measure twice, cut once: Optimal inventory and harvest under volume uncertainty and stochastic price dynamics," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    5. McTaggart, Ewan & Megiddo, Itamar & Kleczkowski, Adam, 2023. "The effect of pests and pathogens on forest harvesting regimes: A bioeconomic model," Ecological Economics, Elsevier, vol. 209(C).
    6. Nguyen, Trung Thanh & Nghiem, Nhung, 2016. "Optimal forest rotation for carbon sequestration and biodiversity conservation by farm income levels," Forest Policy and Economics, Elsevier, vol. 73(C), pages 185-194.
    7. Chen, Si & Shahi, Chander & Chen, Han Y.H. & McLaren, Brian, 2017. "Economic analysis of forest management alternatives: Compositional objectives, rotation ages, and harvest methods in boreal forests," Forest Policy and Economics, Elsevier, vol. 85(P1), pages 124-134.
    8. Kolo, Horst & Kindu, Mengistie & Knoke, Thomas, 2020. "Optimizing forest management for timber production, carbon sequestration and groundwater recharge," Ecosystem Services, Elsevier, vol. 44(C).
    9. Petri P. Kärenlampi, 2018. "Stationary Forestry with Human Interference," Sustainability, MDPI, vol. 10(10), pages 1-17, October.

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