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Discount Rate and Timber Rotation: the Case of Eucalyptus Saligna

Camilo Restrepo-Estrada () and Mauricio Alviar ()

Lecturas de Economía, 2010, issue 73, 149-164

Abstract: Eucalyptus is one of the most important economical and environmental species in Colombia. The main goal of this article is to study the relationship between the discount rate and the year of Eucalyptus Saligna optimal harvest, through the Fisher and Hotelling’s method. The methodology consists of calculating the maximum Net Present Value and performing a sensitivity analysis between the year of harvest and the discount rate. The area of study is located in the eastern region of the state of Antioquia, where data was available. The results suggest that the optimal year of harvest has an inversely proportional relation with the discount rate, and it decreases for higher rates.

Keywords: Net present value; year of harvest; discount rate; optimal rotation; eucalyptus; Colombia (search for similar items in EconPapers)
JEL-codes: Q20 Q23 (search for similar items in EconPapers)
Date: 2010
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Handle: RePEc:lde:journl:y:2010:i:73:p:149-164