© 1964 by Institute of Chartered Foresters
An Economic Analysis to Aid the Marginal Decision on Rotation Length
I. Presentation of the Principle
University College of North Wales Bangor
This economic analysis of the rotation problem is based on the actual decision which the forest manager must make for every stand, i.e. whether to fell now or in five years or so. This marginal decision becomes important, and need only be carefully considered, when the stand nears financial maturity. The marginal approach is perhaps the most realistic approach to the problem of financial rotations. The financial decision is based upon the recognized criterion of maximum net discounted revenue (N.D.R.) per unit total invested capital. Certain theories of production economics are combined with the practical methods of forest valuation. These principles are used to present the economic analysis as a graphical choice of the rotation at which the combined yield of pulpwood and sawtimber maximizes N.D.R. Finally, current product prices are introduced and the optimum rotation is found. These current prices may genuinely be assumed to be constant for any particular five-year period. A subsequent paper will develop the basic principle into a multi-product technique. The principle is presented essentially as a fundamental technique for the projects of forest economics: its application and use are considered here in general terms, and for a specific Sitka spruce (Picea sitchensis) stand type. An instrument for the rapid determination of financial rotation and N.D.R. has been developed from this principle of rotation determination.