Optimal management of loblolly pine plantations with stochastic price trends

Abstract

An economic analysis of loblolly pine (Pinustaeda L.) plantation management options with stochastic sawtimber and pulpwood stumpage price trends is conducted using the North Carolina State University Plantation Management Simulator, a widely used model in the southeastern United States. Results for stands with a range of site indices suggest that regimes with high planting densities combined with commercial thinning options have higher expected present values than do regimes without thinning options, especially in plantations with hardwood competition. Such regimes are superior because high planting densities increase the returns from pulpwood thinnings without compromising sawtimber volume at rotation age. Further, high planting densities maintain the option to produce either sawtimber or pulpwood depending on the stumpage prices at midrotation. Optimal regimes are conditional on the sawtimber and pulpwood prices at the time of planting. A comparison of results for plantations with and without hardwood competition suggests that when the hardwood stumpage price is likely to increase over time, removing hardwoods with commercial thinning is superior to removing hardwoods immediately after planting. Finally, planting and thinning regimes that are optimal for deterministic price trends provide near-optimal expected returns when employed in an environment where price trends are stochastic.