Some economic aspects of growing forest stands.
The aim of this paper was that of studying the optimum growing schedules of forest stands, with the classic Faustmann formula as starting point. The study is mainly theoretical in nature. The study shows that the net present-value of the future revenues from a forest stand can be calculated, not only by means of the harvesting revenues, but also by a more theoretical concept, here termed the current gross soil rent. The current gross soil rent represents the difference between the current value growth and the rent of the growing stock.
By use of the concepts described here, it is theoretically possible to find the growing schedule for the stand which maximizes the net present-value of the stand. To make the formulae simpler, a one-year period has been adopted for discussion of the concepts involved in determination of the optimum structure and density of the growing stock, and the financial maturity. However, these concepts can be extended to cover periods of any length.
The method for determination of the optimum growing schedule for a forest stand can be summarized as follows: Thin the stand as the internal rate of return on the marginal increase in ’timber capital’ falls below the guiding rate of interest. Clear-cut and regenerate the stand as the internal rate of return on the sum of the ’timber and soil capital’ falls below the guiding rate of interest.
The PDF includes a summary in Finnish.
Published in 1968