Impact of stochastic price and growth processes on optimal rotation age

European Journal of Forest Research

Volumn 125, Issue 4, 2006, Pages 335-343

  Penttinen, Markku J ^a  

^a FINNISH FOREST RESEARCH INSTITUTE   (Finland)

Author keywords

Optimal rotation age; Pressler's indicating percentage; Stumpage price drift and volatility; Variable value growth and stand establishment cost; Volume growth volatility

Indexed keywords

ECONOMICS; FOREST MANAGEMENT; FORESTRY POLICY; FORESTRY PRODUCTION; GROWTH RATE; HARVESTING; SILVICULTURE;

EURASIA; EUROPE; FINLAND; NORTHERN EUROPE; SCANDINAVIA;

PINUS SYLVESTRIS;

EID: 33746653069     PISSN: 16124669     EISSN: None     Source Type: Journal    
DOI: 10.1007/s10342-006-0117-7     Document Type: Article

References (37)

1. Boscolo M, Vincent JR (2003) Nonconvexities in the production of timber, biodiversity, and carbon sequestration. J Environ Econ Manage 46(2):251-268
2. Clarke HR, Reed WJ (1989) The tree cutting problem in a stochastic environment: The case of age dependent growth. J Econ Dynam Control 13(4):569-595
3. Gong P (1998) Risk preferences and adaptive harvest policies for even aged stand management. For Sci 44(4):496-506
4. Hynynen J, Ojansuu R, Hökkä H, Siipilehto J, Salminen H, Haapala P (2002) Models for predicting stand development in the MELA System. Finnish Forest Research Institute, Helsinki, Research Papers 835, pp 116
5. Hynynen J, Antikoski A, Siitonen J, Sievänen R, Liski J (2005) Applying the MOTTI simulator to analyse the effects of alternative management schedules on timber and non-timber production. For Ecol Manage 207(1-2):5-18
6. Hyytiäinen K, Tahvonen O (2001) The effects of legal limits and recommendations on timber production: The case of Finland. For Sci 47(4):443-454
7. Insley M (2002) A real options approach to the valuation of a forestry investment. J Environ Econ Manage 44(3):471-492
8. Insley M, Rollins K (2005) On solving the multirotational timber harvesting problem with stochastic prices: A linear complementary formulation. Am J Agric Econ 87(3):735-755
9. Insley M, Wirjanto T (2004) Contracting contingent claims and dynamic programming approaches for valuing a risky resource investment. Department of Economics, University of Waterloo, Waterloo, 36 pp
10. Kangas AS (1998) Uncertainty in growth and yield projections due to annual variation of diameter growth. For Ecol Manage 108(3):223-230
11. Karppinen H, Hänninen, H, Ripatti, P. (2002). The finnish forest owner 2000. Finnish Forest Research Institute, Research Papers 852, Helsinki, 83 pp [in Finnish]
12. Klemperer WD, Cathcart JF, Haring T, Alig RJ (1994) Risk and discount rate in forestry. Can J For Res 24:390-397
13. Kuuluvainen JO, Tahvonen O (1999) Testing the forest rotation model. Evidence from panel data. For Sci 45(4):539-549
14. Martos B (1975) Nonlinear programming theory and methods. North-Holland Publishing Co, Amsterdam, 279 pp
15. Matala J, Hynynen J, Miina J, Ojansuu R, Peltola R, Sievänen R, Väisänen H, Kellomäki S (2003) Comparison of a physiological model and a statistical model for prediction of growth and yield in boreal forests. Ecol Model 161(1-2):95-116
16. MATLAB (2002) MATLAB. The language of technical computing using MATLAB version 6. The Mathworks, 1036 pp
17. Möhring, B (2001) The German struggle between the 'Bodenreinertragslehre' (land rent theory) and 'Waldreinertragslehre' (theory of the highest revenue) belongs to the past - but what is left? For Policy Econ 2(2):195-201
18. Morck R, Schwarz E, Stangeland D (1989) The valuation of forest resources under stochastic prices and inventories. J Finan Quant Anal 24(4):473-487
19. Øsendal B (1985) Stochastic differential equations: An introduction with applications. Springer, Berlin Heidelberg New York, 205 pp
20. Penttinen M (2000) Timber harvesting with variable prices, costs and interest rates. Finnish Forest Research Institute, Research Papers 785, Helsinki, 38 pp
21. Pressler MR (1860) For the comprehension of net revenue silviculture and the management objectives derived thereof [In German]. Allgemeine Forst und Jagd-Zeitung 36:173-191
22. Redsven V, Anola-Pukkila A, Haara A, Hirvelä H, Härkönen K, Kettunen L, Kiiskinen A, Kärkkäinen L, Lempinen R, Muinonen E, Nuutinen T, Salminen O, Siitonen M (2005) MELA 2005 Reference manual, 621 pp URL: http//www.metla.fi/metinfo/mela/tuotteet/mela2005.pdf
23. Reed WJ, Haight RG (1996) Predicting the present value distribution of a forest plantation investment. For Sci 42(3):378-388
24. Salminen H, Lehtonen M, Hynynen J (2003) MOTTI growth and yield simulator - a decision support tool for stand management. Decision Support for Multiple Purpose Forestry, April 23-25, 2003, Vienna, Austria. IUFRO unit 4.11.03 Information management and information technologies
25. Samuelson PA (1965) Rational theory of warrant pricing. Ind Manage Rev 6:12-31
26. Samuelson P (1976) Economics of forestry in evolving society. Econ Inq 14:466-492
27. Sødal S (2003) The stochastic rotation problem. A comment. J Econ Dynam Control 26:509-515
28. Statistical Yearbook (2005) Finnish statistical yearbook of forestry. Finnish Forest Research Institute, Helsinki, Finland, 424 pp
29. Tapio (2001) Recommendations of good silviculture. Forestry Extension Centre Tapio. Helsinki, 95 pp [In Finnish]
30. The Amendment to the Forest Act (1997) The amendment of the decision on the implementation of the Forest Act, No. 1178/97. The Ministry of Agriculture and Forestry, Helsinki, Finland. 2 pp [In Finnish]
31. Thomson TA (1992) Optimal forest rotation when stumpage prices follow a diffusion process. Land Econ 68(3):329-342
32. Willassen Y (1998) The stochastic rotation problem. A generalization of Faustmann's formula to stochastic forest growth. J Econ Dynam Control 22:573-596
33. Yin R (2001) Combining forest level analysis with options valuation approach - a new framework for assessing forestry investment. For Sci 47(4):475-483
34. Yin R, Newman D (1995) A note on the tree cutting problem in a stochastic environment. J For Econ 1(2):181-190
35. Yin R, Newman D (1997) When to cut a stand of trees. Nat Resource Model 10(3):251-261
36. Yoshimoto A, Shoji I (1998) Searching for an optimal rotation age for forest stand management under stochastic log prices. Eur J Operat Res 105:100-112
37. Yoshimoto A, Shoji I (2002) Comparative analysis of stochastic models for financial uncertainty in forest management. For Sci 48(4):755-766