Browsing by Author "Ojala, Inari"

Forests have a significant role in preventing climate change. Forests work as a carbon sink and produce also other non-timber amenity values alongside commercial timber. Taking these non-timber amenity values into account while calculating the value of forest will have an effect on choosing an optimal forest management regimes. The Faustmann formula and its extensions are widely explored among forest economists. Most notable extensions of the Faustmann formula include the Hartman extension of non-timber amenity values and the inclusion of carbon storage. Both the Hartman model and the Faustmann model with carbon storage, have previously only been analytically studied separately. In this study, the original Faustmann model, Faustmann model with carbon storage, Hartman model and Hartman model with carbon storage is covered. The entirely novel optimal conditions for the unique and finite rotations for these models are presented. In addition, based on empirically estimated ecological growth models, the numerical examples for all of the economic models included in this study is presented. According to the results, extending the classical Faustmann model to cover carbon storage or (and) non-timber amenity values, lengthens the optimal rotation and increases the bare lad value. Additionally, weaker growing conditions always increase the optimal rotation. Moreover, increasing the interest rate may increase or decrease the rotation, depending on the carbon price.