Abstract
The management of second‐growth and old‐growth forest stands has important implications for the global carbon cycle. This paper considers the optimal forest rotation when flows of CO2 to carbon have positive value. If benefits are derived only from carbon, then typically it will never be optimal to harvest any forest stands. This result is a formalization and extension of Harmon et al. [1990]. Private forest owners will often maximize net returns to timber, ignoring benefits from carbon sequestration. Thus, the privately and socially optimal rotations will not generally coincide. We show that the socially optimal rotation is always greater than the privately optimal rotation and less than or equal to the rotation when only carbon is valued.
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