Optimal Stand Management: Traditional and Neotraditional Solutions
The traditional Faustmann (1849) model has served as the foundation of economic theory of the firm for the forestry production process. Since its introduction over 150 years ago, many variations of the Faustmann have been developed which relax certain assumptions of the traditional model, including constant prices, risk neutrality, zero production and management costs, and the single management objective. We describe the traditional Faustmann and provide an overview of the neotraditional Faustmann and Hartman (1976) models. We then use the neotraditional Hartman model to develop testable hypotheses regarding harvest response to timber, land, and amenity values from forests. Using data from the North Carolina coastal plain, we test for inclusion of several often omitted variables in models of industrial and nonindustrial harvest behavior.