Opportunity costs of growing space – an essential driver of economical single-tree harvest decisions

Roman Koster and Jasper M. Fuchs

Forest Policy and Economics, 2022, vol. 135, issue C

Abstract: Controlling the growing space available to trees is essential for silvicultural management. For an efficient, i.e. economical, allocation of the scarce growing space, a qualitative and quantitative knowledge of all drivers of harvest decisions is required. The fundamental Faustmann-Pressler-Ohlin-Theorem reveals these drivers at the stand level: In the economical optimum, the stand's future value increment is equal to the interest of its value plus the land rent of the following stand. However, with increasing availability of single-tree data and single-tree-oriented management of heterogeneous stands, the need to transfer these fundamental economic relationships to the single-tree level arises. While several studies already focus on this problem, approaches using practice-related growth and harvest simulations that omit assumptions on the optimal thinning type are still somewhat rare. Our study seeks to provide a deeper understanding of basic economic principles underlying single-tree harvests. We thus aim to contribute to the methodological improvement of decision support systems regarding the implementation of silvicultural-economic linkages. We present a simulation-optimization model to analyze the importance of opportunity costs of growing space for economical harvests of even-aged single-trees under varying production goals and individual tree characteristics. Here, we show that controlling the competition-based growing space efficiency should guide harvest decisions at a young age, whereas with age the focus should shift to possible investment alternatives for the financial resources fixed in a tree. Our analyses of economical harvest decisions indicate that the importance of individual tree characteristics rises with increasing heterogeneity. We found some surprising economically optimal harvest sequences in heterogeneous groups of trees, which underlines the high potential of our model to inform practical decision making at the single-tree level. By implementing economic theory in marteloscopes, our approach could enable an improved training of forest managers to face complex silvicultural decisions. In an environment shaped by scarcities, the derived principles can be applied to various ecosystem services.

Keywords: Managing tree competition; Thinning; Incremental analysis; Economic optimization (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:forpol:v:135:y:2022:i:c:s1389934121002744

DOI: 10.1016/j.forpol.2021.102668

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