Economic Analysis of the Allowable Cut Effect

Abstract

Abstract A simplified two period harvest scheduling model is developed and used to explore the implications of including the "allowable cut effect" in timber investment analysis. First, maximizing present net worth is taken as the objective of timber harvest scheduling. Then given an even flow constraint on timber harvest schedules, the allowable cut effect has a legitimate role in timber investment analysis. Including the allowable cut effect along with conventional investment criteria tends to reduce the opportunity cost of even flow timber management. The two period model is used to compute both the marginal and total costs of the even flow constraint. The allowable cut effect is also considered from the perspective of social welfare maximization. In this context unambiguous criteria for public investment in timber production are difficult to derive. Cost effectiveness within an exogenously specified constraint on timber output might be an appropriate criterion. Forest Sci. 26:633-642.