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Forest Resources

Forest Resources. Wednesday, April 5. Characteristics of a Forest Resource. Renewable Slow growth Replant Self-regenerate Life cycle External benefits Storable. Forestry Property Rights. For private land owner, right to cut trees is one of the sticks in the bundle of rights

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Forest Resources

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  1. Forest Resources Wednesday, April 5

  2. Characteristics of a Forest Resource • Renewable • Slow growth • Replant • Self-regenerate • Life cycle • External benefits • Storable

  3. Forestry Property Rights • For private land owner, right to cut trees is one of the sticks in the bundle of rights • Publicly owned forest land • Federal and state (20% of land area – 7.5 million acres) • Federal and state programs of multiple use • Private harvest on public land

  4. Biological Model Total volume of wood by age of forest Volume of wood (cu ft) Years

  5. Harvesting Decision Rules • Biological • When average volume is at maximum • Economic • When marginal benefit of one more year just equals the marginal cost of one more year.

  6. Using Field’s Notation: • V0: value of the wood that would result if harvested this year (p x q0). • V1: value of the wood that would result if harvest is delayed one year (p x q1). • ΔV: V1- V0 or the change in value between the two years (what you lose if you cut in year 0) • C: cost of harvest (c x q) • r: discount rate • S: PV of all future net benefits (all future timber harvests with efficient management or other known uses)

  7. (MC = MB) Proceeds if harvested this year (Marginal benefit of harvesting now) Proceeds if harvested next year (Marginal cost of harvesting now)

  8. The Simple Model

  9. For simple model (no future), changing harvest costs does not change optimal time of harvest: Present value of net value, r=.02, when harvest costs are .30/cu ft, .40/cu ft, and .50/cu ft.

  10. For Monday, Read Field Chapter 12, Forest Economics

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