The correct formulation of the problem of a forest owner willing to maximize his intertemporal income with the production of timber within a partial equilibrium was first presented by Martin Faustmann (1849) although his intention then has been to construct a formula for the calculation of the forest land value. The corresponding Faustmann formula combines the relevant aspects of profitable timber production by the cyclic regeneration and harvesting of an even-aged stand.
KeywordsRotation Period Forest Owner Timber Production Partial Equilibrium Investment Model
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