Journal of Forest Economics > Vol 11 > Issue 1

Adaptive thinning strategies for mixed-species stand management with stochastic prices

Fadian Lu, , Peichen Gong, , peichen.gong@sekon.slu.se
 
Suggested Citation
Fadian Lu and Peichen Gong (2005), "Adaptive thinning strategies for mixed-species stand management with stochastic prices", Journal of Forest Economics: Vol. 11: No. 1, pp 53-71. http://dx.doi.org/10.1016/j.jfe.2005.02.003

Published: 01 Jun 2005
© 0 2005 Fadian Lu, Peichen Gong
 
Subjects
 
Keywords
JEL Codes:Q23C61
Even-aged stand managementPrice uncertaintyReservation priceFeedback control
 

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In this article:
Introduction
Methods
Results and discussion
Summary and conclusions

Abstract

This paper presents an efficient and flexible approach of determining optimal thinning strategies for mixed-species stands with stochastic timber prices. The approach aims to determine the optimal stock of each species to be maintained in the stand conditional on the observed stand state and timber prices, whereas thinning intensity is given by the difference between the existing and the optimal stocks. For demonstration purpose, the approach is applied to determine the optimal thinning strategies for an example stand of Scots pine (Pinus Sylvestris L.) and Norway spruce (Picea abies L. Karst.) in northern Sweden. The optimal stock of each species is formulated as a parametric function of stand age and stumpage prices of the respective species. A reservation price function is constructed to determine the optimal time of clearcut based on the observed stand state and timber prices. The parameters of the optimal stock-level and reservation price functions are determined by maximizing the expected present value of the stand. The results indicate that using the optimal stock-level function approach can significantly improve the thinning decisions for mixed species stand with stochastic timber prices.

DOI:10.1016/j.jfe.2005.02.003