When Faustmann Forest Stand Is Facing A Convex Regeneration Cost

Abstract

If the cost of forest regeneration is convex or contains convex segments with increasing land area that must be forested, then the Faustmann approach has the potential to not provide an optimal cycle. This happens when the available land to be planted is too small or too large. With the regeneration cost that contains the convex segment, the optimization problem is not merely looking for the optimal cycle but also the optimal stand area. If the available land is too small so that the development of plantation forests is not feasible, then allowing the land in question not to be used to plant forests is reasonable. However, if the non-feasibility is caused by the size of the land which is too large, then it is very clear that there is something that needs to be fixed. The paper shows how optimal rotation and optimal area of the stand are solved simultaneously, especially when the available land is very large so that the land expectation value becomes negative. There is a condition that makes not all available land needs to be forested if the goal to be achieved is the maximum land expectation value.