preloader

Article DetailsArticle Details

Sequential Forest Harvesting In A Stochastic Environment

Sequential Forest Harvesting In A Stochastic Environment

DATE PUBLISHED
Published October 17, 2015
SECTION
Articles

Author Details

Abstract

The present paper extends Faustman model to incorporate uncertainty of forest growth and develop sequential forest harvesting strategies, by making use of the
optimal stopping theory. More precisely, we formulate what follows the geometric Brownian motion to be the increment of the forest stock, not the forest stock itself, assuming the drift parameter to be negative. It is revealed that frequency of harvesting should decrease if uncertainty of forest growth increases or harvesting becomes more costly.

Keywords

.

References

Alvarez, L., and E. Koskela. 2003. On Forest Rotation

under Interest Rate Variability. Interrnational Tax and

Public Finance 10, 489–503.

Bentolila, S. and G. Bertola. 1990 Firing Costs and

Labor Demand: How Bad is Eurosclerosis, Review of

Economic Studies, 57(3), 381-402.

Chang, F. 2005. On the Elasticities of Harvesting Rules.

Journal of Economic Dynamics and Control 29,469–

Chang, S. 1983. Rotation Age, Management Intensity,

and the Economic Factors of Timber Production: Do

Changes in Stumpage Price, Interest Rate, Regeneration

Cost, and Forest Taxation Matter? Forest Science 29,

–277.

Chang, S. 1984. The Determination of the Optimal

Rotation Age. A Theoretical Analysis. Forest

Ecological Management 8, 137–147.

Clarke, H. R. and W. J. Reed. 1988. A Stochastic

Analysis of Land Development Timing and Property

Valuation. Regional Science and Urban Economics 18,

–381.

Dixit, A.K. 1989 Hysteresis, Import Penetration, and

Exchange Rate Pass Through, Quarterly Journal of

Economics 104, pp.205-228.

Farzin, Y. H., K.J.M.Huisman and P.M.Kort. 1988

Optimal Timing of Technology Adoption, Journal of

Economic Dynamics and Control 22, pp.779-799

Faustmann, M., 1849. On the determination of the value

which forest land and immature stands pose for

forestry. In Gane M. and Linnard, W. (eds.): Martin

Faustmann and the evolution of discounted cash flow.

Oxford, England: Oxford Institute (105), pp.27-55.

Fujita, Y., 2007. A New Analytical Framework of Agile

Supply Chain Strategies, International Journal of Agile

Systems and Management, Vol. 2, No. 4, pp.345- 359

Fujita, Y., 2008. A new Look at Fashion Brand

Management-product switching strategies in the face of

imitation, Research Journal of Textile and Apparel.

Vol. 12 No. 3.38-46.

Heaps, T. 1984. The Forestry Maximum Principle.

Journal of Economic Dynamics and Control 7, 131–

Heaps, T., and P. Neher. 1979. The Economics of

Forestry when the Rate of Harvest is Constrained.

Journal of Environmental Economics and Management

, 297–316.

Insley, M. C., and K. Rollins. 2005. On Solving the

Multirotational Timber Harvesting Problem with

Stochastic Prices: A Linear Complementarity

Formulation. American Journal of Agricultural

Economics 87(3), 735–755.

Kilkki, P., and U. Väisänen. 1969. Determination of the

Optimal Cutting Policy for the Forest Stand by Means

of Dynamic Programming. Acta Forestalia Fennica

, 100–112.

McConnell, K., J. Daberkow, and I. Hardie. 1983.

Planning Timber Production with Evolving Prices and

Costs. Land Economics 59, 292–299.

Näslund, B. 1969. Optimal Rotation and Thinning.

Forest Science 15, 446–451.

Newman, D., C. Gilbert, and W. Hyde. 1985. The

Optimal Forest Rotation with Evolving Prices. Land

Economics 61, 347–353.

Subscribe
to our newsletter

Subscribe
to our newsletter