Optimizing forest management under uncertain growth and economic conditions

In their article, Pukkala and Kellomäki call optimization that produces fixed cutting years, cutting basal areas or cutting diameters 'anticipatory optimization'. Optimization that produces rules on how to react to the actual state of nature is called 'adaptive optimization'. Both optimization approaches lead to the same management strategy when growth and all other factors are deterministic. Differences appear when growth or price is stochastic.

The calculations were carried out for a mixed stand of Scots pine, Norway spruce and birch under the conditions of the northern boreal case study area in the project "MOdels for AdapTIVE forest Management" (MOTIVE). Results show that increase in tree growth rate under climate change does not strongly affect the optimal management if timber price is fixed. However, if timber prices vary, it is usually beneficial to delay clear-felling whether or not there is a climate-induced trend in tree growth. It is also beneficial to distribute the incomes more evenly among different cutting events when risk and risk aversion increase. In mixed stands, there will be more alternatives for the adaptation of management, as the preference for tree species can be changed over time based on their growth and the prices of the different assortments.

"The study showed what clever forest landowners already know. When future round wood prices and uses are unknown, the landowner should continuously have several tree species and timber assortments in his forest. Growing only spruce in even-aged stands is risky business. We hope that our study will promote diversified forest management, leading to diversified forest structures," says Prof. Timo Pukkala from the School of Forest Sciences at the University of Eastern Finland.