Optimal stocking level and final harvest age with stochastic prices

This paper presents an integrated strategy for thinning and final harvest decisions in even-aged stand management under conditions of uncertainty in future timber prices.The strategy consists of two parts: an optimal stocking level function that guides the choice of thinning intensity, and a reservation price function for determining the time of final harvest. Optimal stocking level is modelled as a function of stand age and stumpage price. The reservation price function is formulated using stand age and standing timber stock as independent variables. The coefficients of the two functions are optimised simultaneously for an example stand of Scots pine (Pinus Sylvestris L.) in northern Sweden. The functions obtained are then used to simulate the thinning and final harvest decisions for the example stand. The integrated strategy is compared with a pure reservation price strategy where no thinning is allowed, and with the optimal management regime determined based on the expected timber prices.