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Bequests, Credit Rationing and in situ Values in the Faustmann–Pressler–Ohlin Forestry Model

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  • Olli Tahvonen

Abstract

The problem of determining the optimal time to stop the “pure aging process” has a 150‐year history in forestry. The success of the rotation model lies in the fact that it is taken to be theoretically sound, empirically testable and has clear practical relevance. Nonetheless, empirical findings show that timber supply depends on variables missing from the original formulation. Previous research has addressed the problem by abandoning the pure aging description of forests. This study demonstrates that the optimal aging process becomes forest‐owner specific under imperfect land and capital markets and if the owner has in situ preferences.

Suggested Citation

  • Olli Tahvonen, 1998. "Bequests, Credit Rationing and in situ Values in the Faustmann–Pressler–Ohlin Forestry Model," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(4), pages 781-800, December.
  • Handle: RePEc:bla:scandj:v:100:y:1998:i:4:p:781-800
    DOI: 10.1111/1467-9442.00136
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    Citations

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    Cited by:

    1. COUTURE Stephane & REYNAUD Arnaud, 2006. "Multi-stand Forest Management Under a Climatic Risk: Do time and Risk Preferences Matter?," LERNA Working Papers 06.17.210, LERNA, University of Toulouse.
    2. Kuuluvainen, Jari & Karppinen, Heimo & Hänninen, Harri & Uusivuori, Jussi, 2014. "Effects of gender and length of land tenure on timber supply in Finland," Journal of Forest Economics, Elsevier, vol. 20(4), pages 363-379.
    3. Tahvonen, Olli & Salo, Seppo & Kuuluvainen, Jari, 2001. "Optimal forest rotation and land values under a borrowing constraint," Journal of Economic Dynamics and Control, Elsevier, vol. 25(10), pages 1595-1627, October.
    4. Tahvonen, Olli & Salo, Seppo, 1999. "Optimal Forest Rotation within SituPreferences," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 106-128, January.
    5. Sahashi, Yoshinao, 2002. "The convergence of optimal forestry control," Journal of Mathematical Economics, Elsevier, vol. 37(3), pages 179-214, May.
    6. Newman, D.H., 2002. "Forestry's golden rule and the development of the optimal forest rotation literature," Journal of Forest Economics, Elsevier, vol. 8(1), pages 5-27.
    7. Alejandro Guevara & Juan Manuel Torres, 2014. "Bequest motive for conservation in timber production communities," Working Papers 0614, Universidad Iberoamericana, Department of Economics.
    8. Rørstad, Per Kristian, 2022. "Payment for CO2 sequestration affects the Faustmann rotation period in Norway more than albedo payment does," Ecological Economics, Elsevier, vol. 199(C).
    9. Wildberg, Johannes & Möhring, Bernhard, 2021. "Continuous timber harvest — Costly restriction or profitable solution?," Forest Policy and Economics, Elsevier, vol. 123(C).
    10. Couture, Stéphane & Reynaud, Arnaud, 2011. "Forest management under fire risk when forest carbon sequestration has value," Ecological Economics, Elsevier, vol. 70(11), pages 2002-2011, September.
    11. Barua, Sepul K. & Kuuluvainen, Jari & Uusivuori, Jussi, 2011. "Taxation, life-time uncertainty and non-industrial private forest-owner's decision-making," Journal of Forest Economics, Elsevier, vol. 17(3), pages 267-284, August.
    12. Julia Touza & Charles Perrings & María Chas Amil, 2010. "Harvest Decisions and Spatial Landscape Attributes: The Case of Galician Communal Forests," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(1), pages 75-91, May.

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