Forestry - Timber Harvesting Contents General Overview...

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Timber Harvesting Contents: General Overview Differences Between Issues of Forestry and Fisheries The Economic Decision to Harvest a Stand The Case of an Infinite Forest Rotation Management of Forest Resources Factors Affecting Forest Resources’ Dynamics General Overview The economics of forest resources are very similar to the dynamic management of a fishery: • Both forests and fisheries are renewable resource systems. • The economic principles that determine optimal management are very much the same. The major difference between the economics of a forest and a fishery resource are related to biological principles. The central question of commercial or social forest economics is: “When should we cut a stand of trees?” • We will assume that the land has no available alternative use - If we had an alternative use, it would: introduce opportunity cost in the model Differences Between Issues of Forestry and Fisheries The forest problem is a problem of divestment, which means the solution calculates the optimal time to consolidate and sell the entire stock and begin the next rotation. The analogy of a forest rotation is that of a conventional crop which does not get harvested every season. However, the growth cycle of a forest resource (a period of centuries instead of months) is so long that resource owners get really impatient and discounting/ dynamic analysis is important. How Is the Forestry Problem Different From a Fishery? 1) Forestry solutions determine “when” rather than “how much.” 2) Growth occurs over long time periods and can be measured.
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2 3) The forestry problem solves for the optimal time to harvest the entire stock, and the solution gives the optimal length of each rotation of stock. 4) Property rights are secure (no open-access problems). In the forestry problem, the critical element is that the growth function is a function of time, not a function of stock. Figure 6.1 The Forestry Growth Function Q ( t ) = Volume of Timber (i.e., Board Feet or Cubic Feet) Time T1 Tmax Tmsy Ray 2 = Q ( T msy ) T msy Ray 1 = Q ( T 1 ) T 1 Q(t) T2 The growth function of a typical stand of trees looks like this. At first, the volume increases at an increasing rate for very young trees. Then growth of volume slows and increases at a decreasing rate. Finally, when the trees are very old, they begin to have a negative growth rate as they rot, decay, and become subject to disease and pests. The volume of a stand of trees is maximized at time T max , with a volume Q ( T max ).Yet, this is not the volume associated with the Maximum Sustainable Yield (MSY) • MSY occurs where the growth rate equals the Average Growth per rotation. Recall that our goal is to re-plant new trees.
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3 • The average growth rate of a stand, at any time, t, is: A . G . = Q ( t ) t which can be shown by a ray through the origin.
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