Forestry Decision Research Articles

Risk Preferences and Adaptive Harvest Policies for Even-Aged Stand Management

Abstract Uncertainty in future states of nature affects the set of feasible management alternatives as well as a forest owner's preferences among different alternatives. To incorporate uncertainty into forestry decisions, both effects should be recognized simultaneously. This study concerns the final harvest decision in even-aged stand management with stochastic stumpage prices. An expected utility maximization model is developed for determining the optimal adaptive harvest policy. Instead of assuming risk-neutrality on the side of forest owners, the model explicitly incorporates risk preferences into the determination of reservation prices. A method for estimating the set of efficient adaptive harvest policies for risk-averse forest owners is developed based on the mean-variance rule and stochastic dominance analysis. The set of efficient adaptive harvest policies is estimated and compared with the set of efficient rotation ages for two example stands. Numerical results show that any risk-averse forest owner prefers the optimal adaptive harvest policy to the optimal rotation age. By using the rule of "harvest only when the observed stumpage price is equal to or higher than the reservation price," the expected net present value can be increased, and, meanwhile, the standard deviation of the net present value can be reduced significantly. Incorporation of risk-aversion leads to reservation prices that may be lower than those that maximize the expected net present value. It indicates that risk-averse forest owners typically should harvest earlier than risk-neutral forest owners. For. Sci. 44(4):496-506.

Model for predicting the scenic value of rural landscape: A preliminary study of landscape preferences in North Carelia

A simple method for estimating landscape preferences is needed for multipurpose land‐use decisions in agriculture and forestry. In this study the scenic beauty of 29 rural landscapes in eastern Finland was assessed from slides which were produced from eight original pictures by image‐capture technology with the open landscape becoming gradually afforested. Scenic beauty was evaluated through the pairwise comparison technique. This study focused on the possibilities of estimating the far view scenic beauty of rural landscapes. Another purpose was to identify those quantitative variables, based on forest inventory and map data, which were related to preferences of three different interest groups with respect to the rural landscapes studied. The prediction models were developed using linear regression analysis and accounted for 61–82% of the variation of beauty indices. The results of this preliminary study suggest substantial potential for modelling the far view scenic beauty of ordinary rural landscapes based on available inventory and map information.

Modelling uncertainty in natural resource analysis using fuzzy sets and Monte Carlo simulation: slope stability prediction

The techniques of fuzzy logic and Monte Carlo simulation are combined to address two incompatible types of uncertainty present in most natural resource data: thematic classification uncertainty and variance in unclassified continuously distributed data. The resultant model of uncertainty is applied to an infinite slope stability model using data from Louise Island, British Columbia. Results are summarized so as to answer forestry decision support queries. The proposed model of uncertainty in resource data analysis is found to have utility in combining different types of uncertainty, and efficiently utilizing available metadata. Integration of uncertainty data models with visualization tools is considered a necessary prerequisite to effective implementation in decision support systems.

Integrated forest products from former sugarcane plantations in Hawaii

To help landowners and land-use planners evaluate potential forest product ventures on former sugarcane lands in Hawaii, a short-rotation forestry decision support system was developed. An application to estimate annual net returns of hypothetical integrated forest product operations established at two former sugarcane plantations is featured. From a variety of plantation management and wood processing options, linear programming results indicate that the optimal profit opportunity exists for the production of medium density fibreboard and plywood from Eucalyptus saligna plantations, with annual net return estimates of approximately $3.5 million year −1 ($8970 ha −1 year −1) from three commercial thinnings (at 5, 10, and 15 years of age) and one harvest at rotation age (20 years) of trees on the Hamakua plantation on the island of Hawaii and $2.2 million year −1 ($4880 ha −1 year −1) from two commercial thinnings (at 4 and 10 years of age) and one harvest at rotation age (15 years) of trees on the Waialua plantation on Oahu.

Perspective: Forestry Decisions: Striking a Balance

Perspective: Forestry Decisions: Striking a Balance

Evaluation of Researchers' Decisions in Short-Rotation Forestry

Abstract A survey of short-rotation forestry research from 1966-82 provided insights into the political, socioeconomic, institutional, and personal factors influencing decisions made by forestry researchers. Scientists first entered short rotation forestry research because of personal contacts with other scientists, because they considered this a "productive" research area, because funds were available, and because of the "energy crisis." They attributed their success primarily to cooperation with other scientists and potential users and to adequate financial support. These findings offer insight into the individual decisions and the economic and political factors that will shape other forestry research frontiers. For. Sci. 33(1):30-42.

Trends in the Use of Tissue Culture in Forest Improvement

We have analyzed and described the problems and potentials of using tissue culture in micropropagation and biotechnologies related to forest improvement. Trends in forest management concepts, commerical micropropagation, and tissue culture biotechnologies are discussed. Our analysis suggests that tissue culture will contribute significantly to the improvement of forests through exploitation of existing genotypes and production of new, commercially valuable genotypes. Such changes may significantly influence worldwide management decisions in forestry.

Incorporating feedback mechanisms into forestry decision making

Systematic feedbacks between actual and estimated cash flows should allow forestry projects to be compared with abandonment alternatives. The forestry project monitoring circle and the alternative test are briefly described and applied to forestry investments. The use of periodic feedbacks together with the alternative test improve the expected profitability of the projects and decrease their "perceived" uncertainty or risk.

Break-Even Benefit/Cost Model: a Useful Tool for Forestry Decision-Making

Abstract Comparing benefits to costs is basic to decision-making. However, in forestry activities, particularly those involving multiple use, evaluating benefits is difficult. The break-even benefit/cost model eases the problem somewhat: it calculates the minimum benefit required for the project to just break even on a discounted basis. Examples are shown for pest control and soil erosion control. North. J. Appl. For. 3:14-16, Mar. 1986.

The Influence of Price Expectations on Forestry Decisions

Abstract Real price trends in New Hampshire for 1964 to 1983 indicate much variation among species and products. Average annual changes in real stumpage price ranged from -3.0% for spruce/fir pulpwood to +5.6% for high-quality red oak sawtimber from 1964 to 1983. Optimum rotation ages and soil rent values vary significantly with different expectations of stumpage prices. For eastern white pine, a 2% upward trend in real stumpage price lengthens the rotation age by 13 years and almost quadruples soil rent over the amount with constant real prices. Failure to consider the dynamic nature of stumpage prices will lead to suboptimal forestry decisions. North J. Appl. For. 2:81-83, Sept. 1985.

Inflation and the Capital Budgeting Process

Abstract Cash flow analysis under conditions of inflation is discussed by addressing the analysis and application of general and real price changes in forestry investment decisions. Terms required for understanding and undertaking such analyses are defined. Cash flow analyses can be conducted using the current or constant dollar approaches and on before- or after-tax bases. Inflation should be accounted for in analyses conducted on an after-tax basis which include depreciation expenses or depletion allowances. Tables of formulae are presented that modify the traditional, well-known valuation formulas by incorporating general and real price changes.

PRICE PREDICTIONS AND ECONOMICALLY AFFORESTABLE AREA

The profitability of forestry depends on the future trend of timber prices. Three plausible price predictions placed the margin of profitability at three widely differing levels of physical productivity. A good estimate of the elevation at which marginal profitability could be expected under each price prediction was given by productivity/elevation regressions for existing plantations in each of three localities in North Wales. Cartographic sampling enabled the cumulative area of rough grazings below this elevation to be estimated. By combining empirical relationships between price trend, profitability, productivity, elevation and cumulative area, a heavy dependence of afforestable area on future price trend can be demonstrated for North Wales; similar results would be expected throughout Britain. Inclusion of land products other than timber complicates the exercise. The significance of price trend for many forestry decisions justifies much more research on price prediction.

Formal Management Methods in Forestry: The Decision Analysis

SYNOPSIS The article describes some relevant aspects of decision analysis, a method for taking rational decisions in forestry. The system is based on the logical concept of combining a set of objectives and a set of alternatives where use is made of additive utilities as studied, for example, by Fishburn and applied in Zange-meister's Nutzwertanalyse. The main features of the process are described and illustrated by means of forestry examples.

Loblolly Pine Plantations in Southern Highlands: Some Financial Guides

Abstract The profitability of growing loblolly pine plantations (Pinus taeda L.) in the Southern Highlands of Alabama, Georgia, and Tennessee is analyzed and graphical guides are presented. All calculations show before-tax profitability. Present net worths range from $200 to over $1,000, depending on initial conditions. Internal rates of return range from 2 to 11 percent. The effect of professional forestry decisions on profitability is discussed.