Financial analysis of diameter-limit cut stands in northern hardwoods |
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Authors: | John E Wagner Christopher A Nowak Lisa M Casalmir |
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Institution: | (1) Faculty of Forest and Natural Resources Management, SUNY — College of Environmental Science and Forestry, 1 Forestry Drive 304 Bray Hall, 13210 Syracuse, NY, USA |
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Abstract: | Diameter-limit cutting of stands in the US northeast is a common practice often thought to give the landowner the highest
financial returns. A landowner’s decision to diameter-limit cut or use some other harvesting option on a given stand involves
examining mutually exclusive investments. Previous research that compared diameter-limit cutting to other harvesting options
implicitly assumed these were independent investments. This paper develops analytical models to examine a variety of harvesting
options for a single stand, including diameter-limit cutting, as mutually exclusive investments, and with stand and financial
parameters defined by the landowner. These models are used to examine implications of changes in the financial parameters
for harvesting options. It is found that no simple guidelines can be laid down for choice of harvesting options to maximise
the net present value of stands with respect to diameter-limit cutting compared to other harvesting options. The empirical
examples reveal that which harvesting option has the largest net present value depends on the parameters of the landowner’s
stand and the financial parameters chosen by the landowner. The analysis illustrates the importance of understanding the interrelationships
between the financial and stand parameters in determining whether a diameter-limit cut is in fact the best financial option
for a landowner. |
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Keywords: | diameter-limit cut financial analysis |
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