On some aspects of the decision to conserve or harvest old growth forest

In recent times, a great deal of concern has been expressed about the decline in the USAʹs old growth forests. Although there is broad agreement among researchers that old growth forests provide timber and amenity services, and that forest harvesting decisions are inherently stochastic, there have been very few formal analyses that have explicitly accounted for these aspects of the old growth forest management problem. Consequently, this paper studies these aspects of the problem by formulating the decision to conserve or harvest an old growth forest as a Markovian stochastic control problem. It is then shown how this control problem can be analysed numerically using standard linear programming techniques.