Open AccessA point‐input, point‐output forest as a microprototype for capital accounting
Author(s) -
Cairns Robert D.
Publication year - 2019
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/nrm.12224
Subject(s) - economics , point (geometry) , capital (architecture) , salient , simple (philosophy) , investment (military) , capital investment , microeconomics , natural resource economics , finance , mathematics , computer science , geography , geometry , archaeology , philosophy , epistemology , artificial intelligence , politics , political science , law
The point‐input, point‐output, plantation forest was first studied by Martin Faustmann in the mid‐19th century. The exploitation of a Faustmannian forest involves decisions concerning investments and receipts over time that are qualitatively different from the smooth, convex flows that are usually studied in the economics of accounting. The simple, well understood analysis of the forest has implications for the concept of income in forestry as well as in other industries that are typified by nonconvex decisions. A forest is a salient example of the importance of discrete, irreversible investment, and of the role of price effects (capital gains) in income accounting and, more fundamentally, of perceptions of the “right prices” in economic analysis.