Response of Optimal Stand Rotation and Management Intensity to One-Time Changes in Stumpage Price, Management Cost, and Discount Rate

Abstract

Abstract A two-decision-variable, single-stand timber production model is presented, designed along lines suggested by classical economic production theory and standard biological growth theory. Management was interpreted as being comprised of a number of productive activities, which makes the model more general than that used by previous authors. Departing from work by Chang (1983), the sign of the second-order cross-partial derivative of volume with respect to rotation age and management intensity was found to be positive in a typical forest management scenario. The analogous partial derivative of soil expectation value was negative. It was then possible to show algebraically that a one-time increase in stumpage value induced a higher optimal management intensity and a lower rotation age. A one-time decrease in the cost of management caused changes of the same nature. Other methods were used to determine a one-time increase in the discount rate reduced both the optimal management intensity and rotation length, although the cost structure may be unusual enough to have the opposite effect on the optimal rotation. An inconsistency in the form of the production function used by Chang (1983) was found to account for the discrepancy between the comparative statics results reached in his empirical analysis and those found here. For. Sci. 36(2):212-223.