@article{Hyytiainen:198457,
      recid = {198457},
      author = {Hyytiainen, Kari and Penttinen, Markku},
      title = {Forest owners' divestment and investment strategies},
      journal = {Scandinavian Forest Economics: Proceedings of the Biennial  Meeting of the Scandinavian Society of Forest Economics},
      address = {2006-05},
      number = {1330-2016-103718},
      pages = {3},
      year = {2006},
      abstract = {Forest owners' optimal harvesting and investment  strategies are studied at the forest holding
level by  including individual forest stands in an asset class  portfolio. The forest owner has an
option either to  clearcut the mature stands and to invest the capital in  financial or real asset
classes (bank deposits, government  bonds, stocks, apartments) or to postpone clearcutting  and
retain capital in standing trees. Forest inventory  data, simulation-optimisation programme
Mela and statistics  of timber prices are utilised to compute the return series  for forest stands.
Numerical results show that the optimum  level of clearcutting decreases markedly with  initial
non-forest wealth, particular at low risk-free  rates of interest. This suggests that it is rational
for  non-industrial private forest owners to employ shorter  rotations than institutional
investors that possess  diversified portfolios. Increasing the variety of stand  structures by
planting different species is not likely to  bring substantial benefits due to the correlation
between  returns from forest stands. The value growth of forest  stands can be used to estimate
annual returns only for  those stands that are soon to be mature. An alternative  method for
computing the returns for stands at any  development phase is proposed based on the net
present  value of the stand adjusted with fluctuations in forest  land prices. This method applies
to cases where selling  forest stands in the forest land market is considered as an  option. Even
if selling is not an option, the ratio of  maximised net present value to value at immediate
harvest  can be used as a 'maturity index' for ranking the stands  for portfolio optimisation.},
      url = {http://ageconsearch.umn.edu/record/198457},
      doi = {https://doi.org/10.22004/ag.econ.198457},
}