Abstract
Study of the investment behaviour of a tenure-holding forestry firm in Canada has policy implications and is, therefore, important. Investment by a firm in establishing a plant was analyzed in an earlier issue (June 1986) of this journal. In this paper, the firm's investment in the management of Crown forest lands is investigated. The impacts of tenure conditions, taxation, and technological progress have been analyzed. Tenure insecurity has been found to be only partly responsible for a firm's less than enthusiastic behaviour regarding investment in forest management. Long rotation is by far the single most important factor inhibiting expenditure on forest management inputs. A judicious mixture of tenure and taxation regulations can be used as a policy instrument for encouraging intensive forest management. Anticipation of even very modest secular increases in profits due to technological progress can make intensive forestry a desirable economic activity.
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