Open AccessWHEN TO CUT A STAND OF TREES?
Author(s) -
Yin Runsheng,
Newman David
Publication year - 1997
Publication title -
natural resource modeling
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.28
H-Index - 32
eISSN - 1939-7445
pISSN - 0890-8575
DOI - 10.1111/j.1939-7445.1997.tb00108.x
Subject(s) - postponement , optimal stopping , mathematics , mathematical economics , economics , rotation (mathematics) , stopping time , bounded function , econometrics , mathematical optimization , statistics , operations management , mathematical analysis , geometry
This paper revisits the debate over the economic optimality of different timber harvest rules. The traditional Faustmann and Maximum Sustained Yield rotation determinations are confined to a deterministic world. Once stochasticity is introduced into the model formulation and the additional rental and management costs due to postponement of harvest are taken into account, we find that the optimal stopping time becomes random and varies in response to changes in the underlying price and growth processes. As a result, this stochastic optimal stopping time is bounded by the Faustmann cutting age from below if variabilities of the stochastic processes diminish to zero, but not necessarily by the MSY rotation from above.