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This bulletin considers option values related to a principal problem for forestry investors, the timing of harvests. The purpose is to present a general theory of the rotation problem under uncertainty and irreversibility and provide a methodology for empirically estimating option values. Modifications of the framework for analyzing options values related to other aspects of forestry investments are also discussed.
Maine Agricultural and Forest Experiment Station
Agricultural and Resource Economics
Plantinga, A.J. 1996. Forestry investments and option values: Theory and estimation. Maine Agricultural and Forest Experiment Station Technical Bulletin 161