Economic optimization of the rotation age of stands

Abstract

The central task of this research was to choose the age at which stands of growing timber should be harvested. The choice governs how long each stand must continue to earn interest, and also governs the size of the total inventory that must be maintained to sustain the annual harvest. It is a problem that calls for analysis of biological as well as economic relationships over time, and has intrigued economists for more than two centuries. The paper presents the theoretical background and results of economic optimization of the rotation age of a single stand. It analyses the timber production function depending on rotation age, growth, cost and other characteristics of forest, as well as the costs of land. The prerequisite for achieving the economic optimum of the rotation age of a stand is to balance the current increase in the total timber production value (growth and yield) and the value of opportunity costs from delaying cutting till the next year. This paper demonstrates how this economically optimum rotation age can be calculated, and how it varies according to the biological growth and economic parameters of the forest.