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Again on the optimal rotation period of renewable resources: wrong objections to a right objective

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Abstract

An article coming from my pen has met with opposition. If the critics are to be believed, I put forth an erroneous conception on how to calculate the present value of a forest mill’s total assets, including soil and standing timber. This reproach, however, is untenable. In fact, the economically correct solution brings to light that the principle of sustainable maximum yield is productively efficient and at the same time most lucrative.

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Notes

  1. 1.

    Faustmann (1968, p. 28, italics added). The passage reads in German: “Welches ist der reine Geldertrag, den ein jetzt holzleerer Waldboden immerwährend in jährlich gleicher Größe liefert?” Faustmann (1849, p. 442).

  2. 2.

    Faustmann (1968, p. 27). In the original, there is talk of “Waldzerstörungen durch Feuer, Insekten, Menschen …” Faustmann (1849, p. 441).

  3. 3.

    Helmedag (2018).

  4. 4.

    Faustmann (1968, p. 32). In German: “Wird aber ein mit Holz bebauter Boden verkauft, und muß der Verkäufer daher den gegenwärtigen Holzbestand nach seinem jetzigen Verbrauchs-werthe versilbern; so hat der Käufer, außer dem Bodenwerthe, noch den durch Letzteres entstehenden Verlust dem Verkäufer zu ersetzen.“Faustmann (1849, p. 444).

  5. 5.

    Intermittent and sustaining processes generate the same mean present value of the cultivated hectare irrespective of how long trees grow. See Helmedag (2018, p. 304).

  6. 6.

    See Helmedag (2018, Fig. 1, p. 305).

  7. 7.

    See Helmedag (2008).

  8. 8.

    Helmedag (2018, p. 302).

  9. 9.

    Chang et al. (2019, p. 1).

  10. 10.

    Chang et al. (2019, p. 1).

  11. 11.

    Knoke et al. (2019, p. 2) also bring in a total area A.

  12. 12.

    Chang et al. (2019, p. 2).

  13. 13.

    Chang et al. (2019, p. 1).

  14. 14.

    See Helmedag (2008, p. 165 f.).

  15. 15.

    Knoke et al. (2019, p. 2).

  16. 16.

    Knoke et al. (2019, p. 2 f.).

  17. 17.

    Knoke et al. (2019, p. 2).

  18. 18.

    Knoke et al. (2019, p. 5).

References

  1. Chang SJ, Chen Y, Zhang F (2019) Debunking the forest rent fallacy in a fully regulated forest. Eur J For Res. https://doi.org/10.1007/s10342-019-01240-z

  2. Faustmann F (1849) Berechnung des Werthes, welchen Waldboden, sowie noch nicht haubare Holzbestände für die Waldwirthschaft besitzen. In: Allgemeine Forst- und Jagd-Zeitung. December, pp 441–451

  3. Faustmann M (1968) Calculation oft the value which forest land and immature stands possess for forestry. In: Gane M (ed) Martin Faustmann and the evolution of discounted cash flow: two articles from the original German of 1849. Commonwealth Forestry Institute, Oxford, pp 27–55 (Reprinted in: Journal Forest Economics, 1(1) (1995): 7–44)

  4. Helmedag F (2008) The optimal rotation period of renewable resources: theoretical evidence from the timber sector. In: Fabozzi F, Füss R, Kaiser DG (eds) Handbook of commodity investing. Wiley, Hoboken, pp 145–166

  5. Helmedag F (2018) From 1849 back to 1788: reconciling the Faustmann formula with the principle of maximum sustainable yield. Eur J For Res 137(3):301–306

  6. Knoke T, Paul C, Friedrich S, Borchert H, Härtl F, Chang SJ (2019) The optimal rotation for a fully regulated forest is the same as, or shorter than, the rotation for a single even-aged forest stand – comments on Helmedag’s (2018) paper. Eur J For Res. https://doi.org/10.1007/s10342-019-01242-x

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Correspondence to Fritz Helmedag.

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Helmedag, F. Again on the optimal rotation period of renewable resources: wrong objections to a right objective. Eur J Forest Res (2020). https://doi.org/10.1007/s10342-019-01243-w

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Keywords

  • Renewable resources
  • Optimal rotation period
  • Faustmann formula
  • Maximum sustainable yield

JEL Classification

  • Q23
  • D92