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Dimensions of Economic Theory and PolicyEssays for Anjan Mukherji$
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Krishnendu Ghosh Dastidar, Hiranya Mukhopadhyay, and Uday Bhanu Sinha

Print publication date: 2011

Print ISBN-13: 9780198073970

Published to Oxford Scholarship Online: September 2012

DOI: 10.1093/acprof:oso/9780198073970.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 05 December 2020

On Optimal Forest Management

On Optimal Forest Management

A Bifurcation Analysis

(p.50) 4 On Optimal Forest Management
Dimensions of Economic Theory and Policy

Swapan Dasgupta

Tapan Mitra

Oxford University Press

The theory of optimal forest management is a key component of the economic theory of natural resources due to the fact that forests constitute a major renewable resource. It also constitutes one of the key examples of vintage capital theory, making it an important factor in understanding the general theory of intertemporal allocation. This chapter explores the theory of optimal forest management, focusing on the forester's (optimal) policy function. Whereas the literature places an (almost exclusive) emphasis on long-run behaviour of optimally managed forests, the chapter focuses on the optimal harvesting and replanting decisions that should be implemented currently, given any inherited forest. Using bifurcation analysis, it examines how the optimal policy function changes in response to variations in two key parameters of the forestry model: the growth rate of trees and the planner's discount rate.

Keywords:   theory of optimal forest management, bifurcation analysis, natural resources, intertemporal allocation, policy function, forests, harvesting, replanting, growth rate, discount rate

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