Forest Rotations and Stand Interdependency: Ownership Structure and Timing of Decisions

38 Pages Posted: 2 Apr 2002

See all articles by Gregory S. Amacher

Gregory S. Amacher

Virginia Polytechnic Institute & State University - Department of Forestry

Erkki Koskela

University of Helsinki - Department of Political and Economic Studies; CESifo (Center for Economic Studies and Ifo Institute); Bank of Finland - Research Department; IZA Institute of Labor Economics

Date Written: February 2002

Abstract

This paper extends the Hartman model to study the optimal rotation age of two interdependent stands when the stream of amenities produced from the two stands may be complements or substitutes, both in space and over time. In the presence of stand interdependence both the ownership structure and the sequence of decision making matters. Rotation age choices are examined and compared under a variety of equilibria, including Nash, Stackelberg, and sole owner cases which differ as to the level of commitment by landowners to their choices. We show that the sole owner's rotation age is longer than the rotation age solved under both Nash and Stackelberg assumptions if the stands are spatial complements, but shorter if they are substitutes. The precise relationship between the Nash and Stackelberg rotation ages, and the qualitative properties of rotation ages in terms of timber prices, regeneration costs, and interest rates, also depend on how spatial substitutability and complementarity between stands evolves through time.

Keywords: Forest Rotation, Amenity Services, Stand Interdependence

JEL Classification: Q23, H21

Suggested Citation

Amacher, Gregory S. and Koskela, Erkki, Forest Rotations and Stand Interdependency: Ownership Structure and Timing of Decisions (February 2002). CESifo Working Paper Series No. 673. Available at SSRN: https://ssrn.com/abstract=303707

Gregory S. Amacher

Virginia Polytechnic Institute & State University - Department of Forestry ( email )

307 Cheatham Hall
Blacksburg, VA 24061
United States

Erkki Koskela (Contact Author)

University of Helsinki - Department of Political and Economic Studies ( email )

P.O. Box 54
FIN-00014 Helsinki
Finland
+358 9 191 8894 (Phone)
+358 9 191 8877 (Fax)

HOME PAGE: http://www.cesifo.de/servlet/page?_pageid=56&_dad=portal30&_schema=PORTAL30&pa_id=7298

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Bank of Finland - Research Department ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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