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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.
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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