29
Eτg =(erτ-1)-1[Fg(TH(τ,...),τ)-rEg]
ET =(erTH(τ,...)-1)-1[F(TH(τ,...),τ)-rE], and
ETg =(1-e-rτ)-1τ∫FTg(TH(τ,...),τ)e-rxdx
0
Substituting these explicit formulas into equation A5.1 yields
A5.2 SWτ = (e-rτ -1)-1 [pg'(τ) - rpg(τ) -rVg ]+ (erτ -1)-1 n[f(Th (τ,...),τ) - rEg ]
TH (τ,...)
+(1-e-rTH(τ,...))-1n ∫Fτ(s,τ)e-rsds+(n-1)TτH(erT-1)-1[F(TH(τ,...),τ)-rE]
0
(1-e-rτ)-1nTτ Hτ∫FT(T,x)e-rxdx =0,
0
This first-order condition A5.2 is a combination of direct and indirect effects on social
welfare from private and public forest stands over infinite cycles of rotations.
Appendix 6. Proof of Lemma 2
Note first that we can write
A6.1
Fg(T,τ)-rEg =
τ
∫ Fg (T, x ) e - rxdx
о
Fg (T T
τ∫Fg(T,x)e-rxdx
r
(1 - e-rτ)
If Fτg >(≤) 0, then τ∫Fg(T,τ)e-rxdx>(≤)τ∫Fg(T,x)e-rxdx ⇔
00
Fg (T,T ) (1 - e -rτ ) > (≤)∫ Fg (T, τ)e ~rxdx ⇔
r0
Fg(T,τ) > (≤)
τ (1 e-rτ)
∫Fg(T,x)e-rxdx ( -e )
0
Hence, Fg(T,τ)-rEg >(≤) 0 as Fτg(T,τ)>(≤) 0. Q.E.D.
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