Juha Lappi , Markku Siitonen

A utility model for timber production based on different interest rates for loans and savings.

Lappi J., Siitonen M. (1985). A utility model for timber production based on different interest rates for loans and savings. Silva Fennica vol. 19 no. 3 article id 5244. https://doi.org/10.14214/sf.a15423

Abstract

The paper discusses the evaluation of timber production policies with different income (timber drain) schedules. Special attention is given to the temporal smoothness of the income flow. A utility model is formulated in which the objective is to maximize a fixed consumption pattern, and money can be saved and borrowed at different interest rates. We thus have smoothness requirements only for consumption, the capital market then determines the smoothness of the optimal income flow. Present discounted value and maximization of even income flow criteria are special cases of the utility model. Consumption can be maximized by linear programming. A sample problem is presented.

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Keywords
linear programming; timber production; forest economics; income from fellings; utility model; income flow; present discounted value

Published in 1985

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Available at https://doi.org/10.14214/sf.a15423 | Download PDF