Forest Land Value and Rotation with an Alternative Land Use

We solve Faustmann’s problem when the land manager plans to switch from the current tree species to some alternative species or land use. Such situations occur when the relative value of the alternative increases faster than the value of the species currently in place. The paper characterizes the land value function and the optimum rotations, highlighting the differences between this non-autonomous problem and the traditional Faustmann’s problem. We show in particular that rotations can be either higher and increasing, or lower and decreasing, compared to the traditional, constant, Faustmann’s rotation.
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