Impacts of declining discount rates on optimal harvest age and land expectation values

Research output: Contribution to journalArticle

Abstract

Several national governments now require the discount rate for public projects with long planning horizons to decrease over the life of a project. Theoretical results that characterize the impacts of a declining discount rate on optimal harvest age and land expectation values in the Faustmann Model are presented. New results include: derivation of conditions for a sequences of optimal harvest ages and land expectation values, comparative statics results, conditions that must be satisfied for multiple optima, and proof that harvesting is never optimal immediately before a discrete decrease in the discount rate.

Original languageEnglish (US)
Pages (from-to)27-38
Number of pages12
JournalJournal of Forest Economics
Volume31
DOIs
StatePublished - Apr 2018

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Keywords

  • Declining discount rate
  • Faustmann Model
  • Land expectation value
  • Multiple harvest ages
  • Non-optimal neighborhoods

ASJC Scopus subject areas

  • Forestry
  • Geography, Planning and Development
  • Ecology

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