Modeling optimal pine stands harvest under stochastic wood stock and price in Chile

Abstract

The single and multiple optimal rotation harvesting pine stands models under Logistic wood stock and Brown price stochastic diffusion processes are reformulated as optimal stopping problems with one dimensional stochastic diffusion solvable with the Hamilton–Jacobi–Bellman equations.The application of these models to a Chilean forest company shows the significance of both stochastic processes, since they increase the deterministic optimum by 92.1% for the single rotation and by 130.7% for the multiple rotation case. Also the application validate the stochastic multiple rotation model whose optimal cutting value is 10.9% lower than the actual average stands cut, while the stochastic single rotation harvest model is 66.9% higher than said value.