Slide 6 of 31
Notes:
The classical Faustmann model of optimal forest rotation shows in some cases a positive relationship between optimal harvest age and distance to mill, because of the complex interaction between land value, distance to mill, and stumpage price. The same model would prescribe that stands growing on lower quality sites are optimally grown to later ages than stands on high-quality sites. Also, stands very far from mills have no economic value and are not economically managed and sometimes not even economically harvested. The same goes for stands growing on difficult to harvest sites such as steep slopes or wet soils.
We offer one additional comment. If a stand is close to a mill that consumes large-diameter material only, then there might be an incentive for forest managers to not cut the tree until it reaches larger diameters, since economic value may be maximized this way. In a sense, the rate of value increase is higher for those stands, meaning that it might be optimal to cut the stand at a later age than one far from such a mill; but this economic incentive hinges on many factors, including species physical growth rates, the differential between the large diameter and smaller diameter product market prices, and how being close to that mill affects land value.
