Timber management involves making long-term investment decisions. However, timber prices are characterized by interannual volatility, and the future costs and revenues of management depend on a changing social, technological, and environmental context. Timber management with fluctuating prices is commonly analyzed using an asset pricing model that can be solved as a recursive dynamic program. I reformulate the model in terms of previsions for gambles, and introduce imprecision in both future prices and discount rates. Imprecision in prices and intertemporal preferences leads to imprecise buying and selling prices for timber and for timberland. The results have behavioral implications which may assist in understanding individual landowners and timber markets.
Keywords. timber management, investment analysis, intertemporal preferences, upper and lower previsions
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Department of Natural Resources
University of New Hampshire
215 James Hall
Durham, NH 03824
USA
E-mail addresses:
| Mark Ducey | mjducey@cisunix.unh.edu |