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Economics of Naturally Regenerating, Heterogeneous Forests

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  • Olli Tahvonen
Abstract
An economic model for naturally regenerating, heterogeneous forests is specified to yield both clear-cuts and continuous cover forestry endogenously. The model includes nonconvexities and any number of state variables but is, in its simplest form, a one-state variable problem. Clear-cuts with various rotation lengths and continuous harvesting appear as locally optimal solutions. Necessary and sufficient conditions for the local and global optimality of these two forest management types are obtained. Discounting is found to increase rotation length and to favor continuous harvesting. Initial state may determine the optimality of continuous forest cover versus clear-cuts. The relative value of large trees is an important factor in the optimality of different solutions. Analytical results are demonstrated by an empirical application.

Suggested Citation

  • Olli Tahvonen, 2015. "Economics of Naturally Regenerating, Heterogeneous Forests," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(2), pages 309-337.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/681587
    DOI: 10.1086/681587
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    References listed on IDEAS

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    1. Gregory S. Amacher & Markku Ollikainen & Erkki A. Koskela, 2009. "Economics of Forest Resources," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012480, April.
    2. Salo, Seppo & Tahvonen, Olli, 2002. "On Equilibrium Cycles and Normal Forests in Optimal Harvesting of Tree Vintages," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 1-22, July.
    3. Samuelson, Paul A, 1976. "Economics of Forestry in an Evolving Society," Economic Inquiry, Western Economic Association International, vol. 14(4), pages 466-492, December.
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    1. Parkatti, Vesa-Pekka & Assmuth, Aino & Rämö, Janne & Tahvonen, Olli, 2019. "Economics of boreal conifer species in continuous cover and rotation forestry," Forest Policy and Economics, Elsevier, vol. 100(C), pages 55-67.
    2. Knoke, Thomas & Kindu, Mengistie & Jarisch, Isabelle & Gosling, Elizabeth & Friedrich, Stefan & Bödeker, Kai & Paul, Carola, 2020. "How considering multiple criteria, uncertainty scenarios and biological interactions may influence the optimal silvicultural strategy for a mixed forest," Forest Policy and Economics, Elsevier, vol. 118(C).
    3. Parkatti, Vesa-Pekka & Tahvonen, Olli, 2021. "Economics of multifunctional forestry in the Sámi people homeland region," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    4. Rosa, Renato & Soares, Paula & Tomé, Margarida, 2018. "Evaluating the Economic Potential of Uneven-aged Maritime Pine Forests," Ecological Economics, Elsevier, vol. 143(C), pages 210-217.
    5. Da-Rocha, Jose-Maria & García-Cutrin, Javier & Gutierrez, Maria Jose & Touze, Julia, 2016. "A note on CES Preferences in Age-Structured Models," MPRA Paper 75298, University Library of Munich, Germany.
    6. Thomas Knoke & Carola Paul & Elizabeth Gosling & Isabelle Jarisch & Johannes Mohr & Rupert Seidl, 2023. "Assessing the Economic Resilience of Different Management Systems to Severe Forest Disturbance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(2), pages 343-381, February.
    7. Tahvonen, Olli, 2016. "Economics of rotation and thinning revisited: the optimality of clearcuts versus continuous cover forestry," Forest Policy and Economics, Elsevier, vol. 62(C), pages 88-94.

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