12
the latter effect being stronger. Therefore, in both cases the forest owner lengthens the
private rotation age.
Finally, for decreasing temporal dependence, the private rotation age response is
shown in
Corollary 3. If the temporal interdependence decreases, i.e., if FτT < 0 , implying
that either ALEP complementarity becomes weaker or that ALEP
substitutability becomes stronger, then a rise in the exogenous adjacent stand
shortens the focal private rotation age.
If temporal dependence becomes weaker, then under decreasing ALEP
complementarity a rise in the rotation age of the exogenous stand increases both the
marginal valuation and the opportunity cost effects, but the latter is stronger. If ALEP
substitutability increases, a rise in the rotation age of the exogenous stand decreases
both the marginal valuation and the opportunity cost effects, the former effect being
stronger. In both cases the forest owner shortens the private rotation age.
4. Optimal Public Harvesting with Amenity Externalities
We next apply our analysis to the determination the optimal public rotation age.12
Forest Service adopts a harvesting policy will maximize the social welfare from
public harvesting by accounting also for citizens’ recreation as a component of the
social welfare and for the presence of private harvesting response. We assume that
public forest is a public good, which means that citizens have full access to enjoy the
amenity services from public forests. As for private forests we assume that they may
or may not be a public good, reflecting different practices of various countries as
regards to possible access restrictions to private forests. Moreover, in both cases we
assume that there are no congestion effects associated with enjoying amenity services
of forests.
12 The determination of public harvesting is analyzed also in Amacher (1999) and in Koskela
and Ollikainen (1999), but in the context of a two-period model.
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