Chapter

On Optimal Forest Management

Swapan Dasgupta and Tapan Mitra

in Dimensions of Economic Theory and Policy

Published in print October 2011 | ISBN: 9780198073970
Published online September 2012 | e-ISBN: 9780199081615 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780198073970.003.0004
On Optimal Forest Management

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The theory of optimal forest management is a key component of the economic theory of natural resources due to the fact that forests constitute a major renewable resource. It also constitutes one of the key examples of vintage capital theory, making it an important factor in understanding the general theory of intertemporal allocation. This chapter explores the theory of optimal forest management, focusing on the forester's (optimal) policy function. Whereas the literature places an (almost exclusive) emphasis on long-run behaviour of optimally managed forests, the chapter focuses on the optimal harvesting and replanting decisions that should be implemented currently, given any inherited forest. Using bifurcation analysis, it examines how the optimal policy function changes in response to variations in two key parameters of the forestry model: the growth rate of trees and the planner's discount rate.

Keywords: theory of optimal forest management; bifurcation analysis; natural resources; intertemporal allocation; policy function; forests; harvesting; replanting; growth rate; discount rate

Chapter.  6638 words. 

Subjects: Microeconomics

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