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


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.


Renewable resources Optimal rotation period Faustmann formula Maximum sustainable yield 

JEL Classification

Q23 D92 


  1. Amacher GS, Ollikainen M, Koskela E (2009) Economics of forest resources. The MIT Press, Cambridge/LondonGoogle Scholar
  2. Chang SJ (1998) A generalized Faustmann model for the determination of optimal harvest age. Can J For Res 28(5):652–659CrossRefGoogle Scholar
  3. Conrad JM (2010) Resource economics, 2nd edn. University Press, CambridgeCrossRefGoogle Scholar
  4. Endres M (1919) Lehrbuch der Waldwertrechnung und Forststatistik, 3rd edn. Julius Springer, BerlinCrossRefGoogle Scholar
  5. Faustmann M (1849) Berechnung des Werthes, welchen Waldboden, sowie noch nicht haubare Holzbestände für die Waldwirthschaft besitzen. In: Allgemeine Forst- und Jagd-Zeitung, Dezember, pp 441–451Google Scholar
  6. Faustmann M (1856) Das Spiegel-Hypsometer. Ein neues Instrument zum Höhenmessen. In: Allgemeine Forst- und Jagd-Zeitung. Dezember, pp 440–447Google Scholar
  7. Faustmann M (1968) Calculation of 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: J For Econ, 1(1) (1995): 7–44)Google Scholar
  8. Helmedag F (2008) The optimal rotation period of renewable resources: theoretical evidence from the timber sector. In: Kaiser DG, Füss R, Fabozzi F (eds) Handbook of commodity investing. Wiley, Hoboken, pp 145–166Google Scholar
  9. Houghton J (1683) Num. III. In: Bradley R (ed) Collection of letters for the improvement of husbandry and trade, vol 1728, 2nd edn. Woodman and Lyon, London, pp 258–282Google Scholar
  10. Johansson P-O, Löfgren K-G (1985) The economics of forestry and natural resources. Basil Blackwell, Oxford/New YorkGoogle Scholar
  11. Kant S (2013) Post-Faustmann forest resource economics. In: Kant S (ed) Post-Faustmann resource economics. Springer, Dordrecht, pp 1–19CrossRefGoogle Scholar
  12. König G (1835) Die Forstmathematik mit Anweisung zur Holzvermessung, Holzschätzung und Waldwerthberechnung nebst Hülftafeln für Forstschätzer. Commission der Beckschen Buchhandlung, GothaGoogle Scholar
  13. Löfgren KG (1983) The Faustman–Ohlin theorem: a historical note. Hist Polit Econ 15(2):261–264CrossRefGoogle Scholar
  14. Manz P (1987) Die Kapitalintensität der schweizerischen Holzproduktion. Paul Haupt, BernGoogle Scholar
  15. Moog M, Borchert H (2001) Increasing rotation periods during a time of decreasing profitability of forestry—a paradox? For Policy Econ 2(2):101–116CrossRefGoogle Scholar
  16. Ohlin B (1921) Concerning the question of the rotation period in forestry. J For Econ 1(1) (1995):89–114 (Translation from the Swedish original)Google Scholar
  17. Osmaston FC (1968) The management of forests. George Allen and Unwin, LondonGoogle Scholar
  18. Pressler MR (1859) Der Rationelle Waldwirth und sein Waldbau des höchsten Ertrags. Zweites (selbstständiges) Buch. Die forstliche Finanzrechnung mit Anwendung auf Wald-Werthschätzung und -Wirthschaftsbetrieb. Woldemark Türk, DresdenGoogle Scholar
  19. Sagl W (1995) Bewertung in Forstbetrieben. Blackwell Wissenschafts-Verlag, Berlin/WienGoogle Scholar
  20. Samuelson PA (1976) Economics of forestry in an evolving society. Econ Inq 14(4):466–492CrossRefGoogle Scholar
  21. Scorgie M, Kennedy J (1996) Who discovered the Faustmann condition? Hist Polit Econ 28(1):77–80CrossRefGoogle Scholar
  22. van Suntum U (1995) Johann Heinrich von Thünen als Kapitaltheoretiker. In: Rieter H (ed) Studien zur Entwicklung der ökonomischen Theorie XIV. Johann Heinrich von Thünen als Wirtschaftstheoretiker. Duncker & Humblot, Berlin, pp 87–113Google Scholar
  23. Varian HR (2010) Intermediate microeconomics, 8th edn. W. W. Norton & Company, New York/LondonGoogle Scholar
  24. Viitala E-J (2013) The discovery of the Faustmann formula in natural resource economics. Hist Polit Econ 45(3):523–548CrossRefGoogle Scholar

Copyright information

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

Authors and Affiliations

  1. 1.Department of EconomicsChemnitz University of TechnologyChemnitzGermany

Personalised recommendations