Acceptable logotype

ECO 3620. Environmental Economics

Renewable Resources: Forestry

Maximum Sustained Yield

  1. Stumpage value = Vt
  2. Marginal benefit of growth: change in stumpage value = ΔV/Δt
  3. Average benefit of growth: V/t
  4. Maximum sustained yield (tMSY): ΔV/Δt = V/t

Optimal harvest

  1. Marginal cost of growth: foregone interest opportunity cost = rVt
  2. Optimal harvest (t*): ΔV/Δt = rVt; (ΔV/Δt)/Vt = r

The Optimal Rotation

  1. Opportunity cost of the land = OCL
  2. Optimal rotation (t**):  ΔV/Δt = rVt + OCL
  3. t** < t*

Public Forestry
  1. Nonharvest benefits (NHB)
  2. Optimal rotation (t***): ΔV/Δt + NHB = rVt + OCL
  3. t** < t***

Other Issues

  1. Comparative advantage and multiple use management
  2. Below cost timber sales
  3. Old growth forests