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Forest Land Value and Rotation with an Alternative Land Use

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  • Skander Ben Abdallah
  • Pierre Lasserre

Abstract

We solve Faustmann’s problem when the land manager plans to switch from the current tree species to some alternative species or land use. Such situations occur when the relative value of the alternative increases faster than the value of the species currently in place. The paper characterizes the land value function and the optimum rotations, highlighting the differences between this non-autonomous problem and the traditional Faustmann’s problem. We show in particular that rotations can be either higher and increasing, or lower and decreasing, compared to the traditional, constant, Faustmann’s rotation.

Suggested Citation

  • Skander Ben Abdallah & Pierre Lasserre, 2016. "Forest Land Value and Rotation with an Alternative Land Use," CIRANO Working Papers 2016s-38, CIRANO.
  • Handle: RePEc:cir:cirwor:2016s-38
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    File URL: http://www.cirano.qc.ca/files/publications/2016s-38.pdf
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    References listed on IDEAS

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    1. Clarke, Harry R. & Reed, William J., 1989. "The tree-cutting problem in a stochastic environment : The case of age-dependent growth," Journal of Economic Dynamics and Control, Elsevier, vol. 13(4), pages 569-595, October.
    2. Gregory S. Amacher & Markku Ollikainen & Erkki A. Koskela, 2009. "Economics of Forest Resources," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012480, January.
    3. Heaps, Terry & Neher, Philip A., 1979. "The economics of forestry when the rate of harvest is constrained," Journal of Environmental Economics and Management, Elsevier, vol. 6(4), pages 297-319, December.
    4. repec:eee:foreco:v:29:y:2017:i:pb:p:118-127 is not listed on IDEAS
    5. Robert N. Stavins, 2011. "The Problem of the Commons: Still Unsettled after 100 Years," American Economic Review, American Economic Association, vol. 101(1), pages 81-108, February.
    6. Ben Abdallah, Skander & Lasserre, Pierre, 2017. "Forest land value and rotation with an alternative land use," Journal of Forest Economics, Elsevier, vol. 29(PB), pages 118-127.
    7. Hultkrantz, Lars & Andersson, Linda & Mantalos, Panagiotis, 2014. "Stumpage prices in Sweden 1909–2012: Testing for non-stationarity," Journal of Forest Economics, Elsevier, vol. 20(1), pages 33-46.
    8. Willassen, Yngve, 1998. "The stochastic rotation problem: A generalization of Faustmann's formula to stochastic forest growth," Journal of Economic Dynamics and Control, Elsevier, vol. 22(4), pages 573-596, April.
    9. Reed, William J., 1993. "The decision to conserve or harvest old-growth forest," Ecological Economics, Elsevier, vol. 8(1), pages 45-69, August.
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    12. Sohngen, Brent & Mendelsohn, Robert, 1998. "Valuing the Impact of Large-Scale Ecological Change in a Market: The Effect of Climate Change on U.S. Timber," American Economic Review, American Economic Association, vol. 88(4), pages 686-710, September.
    13. Andersson, Linda & Hultkrantz , Lars & Mantalos , Panagiotis, 2013. "Stumpage Prices in Sweden 1909-2011: Testing for Non-Stationarity," Working Papers 2013:1, Örebro University, School of Business.
    14. Ekholm, Tommi, 2016. "Optimal forest rotation age under efficient climate change mitigation," Forest Policy and Economics, Elsevier, vol. 62(C), pages 62-68.
    15. 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.
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    17. David H. Newman & Charles B. Gilbert & William F. Hyde, 1985. "The Optimal Forest Rotation with Evolving Prices," Land Economics, University of Wisconsin Press, vol. 64(4), pages 347-353.
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    1. repec:eee:foreco:v:29:y:2017:i:pb:p:118-127 is not listed on IDEAS
    2. Ben Abdallah, Skander & Lasserre, Pierre, 2017. "Forest land value and rotation with an alternative land use," Journal of Forest Economics, Elsevier, vol. 29(PB), pages 118-127.

    More about this item

    Keywords

    Forestry; Land value; Faustmann; Alternative Species; Rotation;

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

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