OPTIMAL CHOICE BETWEEN EVEN‐ AND UNEVEN‐AGED FORESTRY

Abstract Existing optimal rotation models include even‐aged management exogenously into the model structure. As an economic model, this Faustmann framework is restrictive, and a more general model should not include any such preconditions. Even‐aged management should follow endogenously as an optimal solution if it proves out to be superior to other systems, such as uneven‐aged management. Without such a general model, the economically optimal choice between even‐aged and uneven‐aged forestry remains somewhat arbitrary. This study specifies such a model and shows how even‐aged management follows endogenously and reveals what factors work in favor of each management alternative. Numerical analysis shows that even‐ and uneven‐aged systems may represent locally optimal solutions and may yield equal economic outcomes. Instead of the usual comparative statics results of the Faustmann model, changes in the rate of discount, timber price, or planting cost may imply that the optimal solution shifts from even‐ to uneven‐aged management.