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A Ricardian Model of Forestry

Listed author(s):
  • Silvia Faggian

    ()

    (Department of Economics, University Of Venice Ca� Foscari, Italy)

  • Giuseppe Freni

    (Department of Business and Economics, University of Naples �Parthenope�, Naples, Italy.)

This paper provides a continuous-time �Ricardian� model of forestry, where, in response to an increase in timber demand, forest cultivation is progressively intensified on the most fertile lands and/or extended to less fertile qualities of lands. It is shown that, at a given level of the rate of interest, a set of �break-through timber prices� gives the order of fertility (i.e., the order in which the different qualities of land are taken into cultivation) and that, for each land, prices of standing trees are positive above a �threshold timber price�. Since, for each land, the break-through price is higher than the threshold price, Ricardo is shown to be right: a higher demand for timber could simply raise those components of the landlord compensation which are not rent.

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File URL: http://www.unive.it/media/allegato/DIP/Economia/Working_papers/Working_papers_2015/WP_DSE_faggian_freni_12_15.pdf
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Paper provided by Department of Economics, University of Venice "Ca' Foscari" in its series Working Papers with number 2015:12.

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Length: 21
Date of creation: 2015
Date of revision: 2015
Handle: RePEc:ven:wpaper:2015:12
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  1. Fabbri, Giorgio & Faggian, Silvia & Freni, Giuseppe, 2015. "On the Mitra–Wan forest management problem in continuous time," Journal of Economic Theory, Elsevier, vol. 157(C), pages 1001-1040.
  2. Tapan Mitra & Henry Y. Wan, 1985. "Some Theoretical Results on the Economics of Forestry," Review of Economic Studies, Oxford University Press, vol. 52(2), pages 263-282.
  3. Salo, Seppo & Tahvonen, Olli, 2002. "On Equilibrium Cycles and Normal Forests in Optimal Harvesting of Tree Vintages," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 1-22, July.
  4. Kurz,Heinz D. & Salvadori,Neri, 1997. "Theory of Production," Cambridge Books, Cambridge University Press, number 9780521588676.
  5. Ali Khan, M. & Piazza, Adriana, 2012. "On the Mitra–Wan forestry model: A unified analysis," Journal of Economic Theory, Elsevier, vol. 147(1), pages 230-260.
  6. Salant, Stephen W., 2013. "The equilibrium price path of timber in the absence of replanting: does Hotelling rule the forests too?," Resource and Energy Economics, Elsevier, vol. 35(4), pages 572-581.
  7. Mitra, Tapan & Wan, Henry Jr., 1986. "On the faustmann solution to the forest management problem," Journal of Economic Theory, Elsevier, vol. 40(2), pages 229-249, December.
  8. Foley, Duncan K, 1975. "On Two Specifications of Asset Equilibrium in Macroeconomic Models," Journal of Political Economy, University of Chicago Press, vol. 83(2), pages 303-324, April.
  9. Samuelson, Paul A, 1976. "Economics of Forestry in an Evolving Society," Economic Inquiry, Western Economic Association International, vol. 14(4), pages 466-492, December.
  10. Salo, Seppo & Tahvonen, Olli, 2003. "On the economics of forest vintages," Journal of Economic Dynamics and Control, Elsevier, vol. 27(8), pages 1411-1435, June.
  11. Piazza, Adriana & Roy, Santanu, 2015. "Deforestation and optimal management," Journal of Economic Dynamics and Control, Elsevier, vol. 53(C), pages 15-27.
  12. Esa-Jussi Viitala, 2013. "The Discovery of the Faustmann Formula in Natural Resource Economics," History of Political Economy, Duke University Press, vol. 45(3), pages 523-548, Fall.
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