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Sequential Forest Harvesting In A Stochastic Environment

Sequential Forest Harvesting In A Stochastic Environment

Published October 17, 2015

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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.




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