Journal of Forest Economics > Vol 16 > Issue 3

Did Pressler fully understand how to use the indicator per cent?

Peichen Gong, , Peichen.Gong@sekon.slu.se Karl-Gustaf Löfgren, , Karl-Gustaf.Lofgren@econ.umu.se
 
Suggested Citation
Peichen Gong and Karl-Gustaf Löfgren (2010), "Did Pressler fully understand how to use the indicator per cent?", Journal of Forest Economics: Vol. 16: No. 3, pp 195-203. http://dx.doi.org/10.1016/j.jfe.2009.11.004

Published: 0/8/2010
© 0 2010 Peichen Gong, Karl-Gustaf Löfgren
 
Subjects
 
Keywords
JEL Codes:Q23
Optimal rotation ageForest economic historyFaustmannPressler
 

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In this article:
Introduction
Optimal rotation age and the IPC
Pressler's contribution
Application of the IPC as a ranking criterion
Conclusion

Abstract

A classical problem in forest economics is the determination of the optimal rotation age. It is commonly acknowledged that Martin Faustmann and Max Robert Pressler contributed the most to the solution of this problem. Faustmann formulated the renowned land expectation value formula, which laid the foundation for economic analyses of the optimal rotation problem. He also provided several hints on how to correctly solve the problem. Pressler's work focused on the growth of the capital in a forest stand. He invented the concept of Indicator Per Cent, and argued that the Indicator Per Cent should be used to guide forestry decision-making. Pressler correctly stated how to use the Indicator Per Cent to determine when a stand should be harvested. However, his suggestions about the choice among silviculture options indicate that he did not fully understand the economic implication of the Indicator Per Cent.

DOI:10.1016/j.jfe.2009.11.004