ECONOMICS OF TIMBER - RENEWABLE RESOURCE IN THE LONG RUN

Using the Douglas fir industry, this study shows that private entrepreneurs holding rational expectations with respect to future prices have historically been discounting the future at a real rate of 5 percent - a much lower rate than that available for other private investments - and, therefore, that these owners have not cut their forests prematurely. In the case of public management, calculated shadow losses incurred by holding old timber are so great that an appeal to nontimber use values is not sufficient to reconcile management practices. Finally, predictions for the long-term price trends for timber indicate a slowdown in the rate of price increase.