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European Journal of Forest Research

, Volume 137, Issue 3, pp 301–306 | Cite as

From 1849 back to 1788: reconciling the Faustmann formula with the principle of maximum sustainable yield

  • Fritz Helmedag
Original Paper
  • 84 Downloads

Abstract

In 1849, Martin Faustmann published a formula for determining the claim on an insurer if fallow woodland has been definitely destroyed. His evaluation is based on an even-aged plantation and a given logging time. The calculation has later been used to derive an allegedly optimal rotation period which nowadays predominates in forestry economics. In fact, the utilized objective function does not engender the superior harvesting strategy but the highest compensation for the damaged ground. However, Faustmann’s approach can be generalized in order to maximize the expected value of a timber company’s total assets comprising soil and existing stumpage. The best felling practice turns out to be the principle of maximum sustainable yield already decreed by Austria’s emperor Joseph II in 1788. As a result, the difference between profitability and efficiency is resolved.

Keywords

Renewable resources Optimal rotation period Faustmann formula Maximum sustainable yield 

JEL Classification

Q23 D92 

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of EconomicsChemnitz University of TechnologyChemnitzGermany

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