@article{Price:199808,
      recid = {199808},
      author = {Price, C.},
      title = {Normal forest structures and the costs of age-class  transformation: an extended summary},
      journal = {Scandinavian Forest Economics: Proceedings of the Biennial  Meeting of the Scandinavian Society of Forest Economics},
      address = {2012-05},
      number = {1333-2016-103804},
      pages = {3},
      year = {2012},
      abstract = {It is sometimes suggested that, because transformation of  uneven-aged stands into an even-aged
structure reduces  profit, even-aged stands should be transformed to  uneven-aged structure. The
argument is false, because  transformation in either direction incurs opportunity costs  of felling
trees before and/or after their optimal  rotations. This effect can be demonstrated, without  the
complicating factors of interaction between trees  within a stand, by modelling transformations
and reverse  transformations between a single-aged forest and a forest  containing a normal ageclass
series of even-aged  stands.
The model used has the normal revenue  characteristics: the first positive revenue is achieved  at
20 years, rising rapidly at first but eventually  approaching an asymptote. For ease of
computation, the  stands are taken to be unthinned, but it is expected that  the results would
remain similar for thinned stands. Only  timber revenues are considered as benefits in  this
treatment. (Even though other factors have an  important influence on rotation, they would  not
fundamentally change the results either, except as  noted.) A 3% discount rate is used.
Each transformation  process starts from either a single-aged forest or a forest  with a normal ageclass
structure of stands. Each ends with  either a forest whose age-class structure is optimised
with  respect to rotation, or one that is single-aged across all  stands. The results in outline are as
follows.
The most  desirable stand structure to receive, as a gift, is  composed of stands grown on the
rotation of maximum forest  rent (mean annual net revenue). This is invariably longer,  often
considerably longer, than the Faustmann rotation: 97  years as opposed to 56 years in the
example taken.
Pukkala  et al. (2010) raise this question: “which structure of  uneven-sized forest stand would I
least wish to clear fell  and transform to even-aged”? This question embodies not  just the future
cash flows forgone from this crop and its  uneven-sized successors, but the current standing
value of  the crop and future cash flows of its even-aged successors.  In the context of even-aged
stands in our sample normal  forest, the answer is: the normal forest structure I would  least wish
to sacrifice would be one with a rotation of 49  years. Furthermore, any normal forest with a
rotation less  than 27 years or more than 77 years should be converted,  with net gain, to a singleaged
forest on a Faustmann  rotation.Any normal forest on an other-than-Faustmann  rotation is worth transforming to a normal forest
on a  Faustmann rotation, by an accelerated or retarded programme  of felling. But, because of
the prolonged transformation  period, any normal forest on a rotation longer than 88  years would
be better transformed in one period to a  single-aged Faustmann rotation.
But the optimal Faustmann  rotation is unlikely to be the best rotation to transform  to, either for
a normal forest or a single-aged one. This  is because of the effects of target age-class structure
on  the degree of deviation from optimal rotation required  during the transformation period.
Only with very low  discount rate, when long-term effects of optimal structure  overwhelm the
short-term costs of transformation, is the  Faustmann rotation approached as the ideal  target
structure. The best rotation to create from bare  land is one of 53 years. This is slightly shorter than  the
Faustmann rotation, because of the desirability of  launching a profitable crop sooner rather than
later. A  rotation as short as 35 years would give no profit at all,  so delay would not be an issue.
If an existing single-aged  forest on a Faustmann rotation is to be transformed to a  normal forest,
the most profitable target rotation is 44  years. This is shorter than the Faustmann rotation,  in
order to reduce the degree of felling before and after  the optimal age.
In all cases considered, there are  opportunity costs in transforming from one age-class  structure
to another, whether from normal to single-aged  forest, or vice versa. This might theoretically be
offset  if cost savings can be achieved. For example, major  reduction in regeneration cost in
mixed-age forests could  justify transformation from an existing single-aged forest.  An
unrealistically large gain in scale economies would be  needed to justify transformation from a
normal to a  single-aged forest. A very low discount rate would be  needed to make these
arguments persuasive in favour of a  theoretically ideal structure to be achieved in the long  term.
Thus transformation of even-aged to uneven-aged  stands would probably have to rely on some
other  justifications than those applying to a normal series of  even-aged stands, such as the
assortment of tree sizes that  can be cut by using a single-tree selection system, or  the
environmental gains of diverse tree sizes within a  stand (Price and Price, 2009).},
      url = {http://ageconsearch.umn.edu/record/199808},
      doi = {https://doi.org/10.22004/ag.econ.199808},
}