Journal of Forest Economics > Vol 17 > Issue 3

Economic analysis of exploitation and regeneration in plantations with problematic site productivity

Andreas Halbritter, , Peter Deegen, , deegen@forst.tu-dresden.de
 
Suggested Citation
Andreas Halbritter and Peter Deegen (2011), "Economic analysis of exploitation and regeneration in plantations with problematic site productivity", Journal of Forest Economics: Vol. 17: No. 3, pp 319-334. http://dx.doi.org/10.1016/j.jfe.2011.02.003

Published: 0/8/2011
© 0 2011 Andreas Halbritter, Peter Deegen
 
Subjects
 
Keywords
Faustmann modelDeclining forest productivityRecovering technologiesExploitationForest plantationComparative statics
 

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In this article:
The site productivity problem
Model for exploitation and regeneration
Comparative static analysis
Discussion and conclusions

Abstract

Although intensive managed plantations clearly increase the growth and yield of forests several papers refer to declining forest productivity. Therefore in this paper we study the impact of declining forest productivity on the land expectation value and the optimal rotation length. We start from the research by Lu and Chang (1996) and try to fill the gap between the stable site productivity (“best”) and the site mining (“worst”) cases. For that we extend the classical Faustmann model by availability of different recovering technologies. In general the model allows the analysis of the two plantation groups: “mining the site by high productive plantation followed by management of degraded areas” and “high productive plantation and regeneration cycling” with the same comparative static. The model, analysis and comparison with the two extreme cases in Lu and Chang (1996) leads to a detailed understanding of land use management when site productivity decline is possible. Particularly the relation between declining periods with intensive land use and land use alternatives after declining periods with regeneration can be well understood. Findings are: Not ever declining process asks for regeneration. Many declining processes can be stopped at early times by high cash flows after mining periods. Shortenings of the regeneration time can boost site mining intensities.

DOI:10.1016/j.jfe.2011.02.003