Forest management is the practical application of the scientific, technical, and economic principles of forestry.
Also Read: Forest Management and Its Objectives
Forest management alternatives.
There is seldom a single objective of forest management. Owners usually have multiple objectives and they often conflict with each other. E.g. maximizing the forest’s present net worth and maintaining a continuous wood flow may conflict.
Some objectives may be mutually exclusive, e.g. producing timber and maintaining wilderness on the same land. So, the owner must give up some or all of one objective to obtain the other.
Forest management alternatives are also defined by the physical production possibilities of the forest. It may be viewed as the many actions that a forest owner may take to achieve his/her objectives. The actions here meant the activities done in the field that will alter the production of one or another or some mix of forest products.
The actions an owner takes can include cutting, reforestation, and construction.
Cutting the forest, or not cutting it, is one of the primary tools for accomplishing management objectives.
- Cutting can manipulate the forest to obtain desired forest products at the desired time frame.
- Different kinds of cutting such as clear-cutting or shelterwood cutting have different effects on the residual stand and hence on the products.
- Both the timing and type of cut are management alternatives that must be decided.
It is the second major set of alternatives that must be chosen to obtain management objectives.
- Choices must be made between natural and artificial reforestation, the kind of site preparation if any, and the species to be regenerated.
- Reforestation practices affect density and species and hence forest production possibilities.
It is a third major set of alternatives that must be chosen, construction kind must be chosen wisely as it can affect the amount of an objective obtained.
E.g., road placement not only affects timber harvest but also affects access to recreation and hunting, aesthetic values, and soil stability.
There are various analytical techniques for choosing between alternatives. Some techniques are general and not unique to forestry whereas some techniques have been developed to answer particular forestry problems.
Discounting and present net worth is general techniques applied to forestry problems whereas land expectation value (Faustman Formula) are special cases of discounting developed for forestry problems.
The simple method of discounting is calculating the present value of the investment.
Vo = the present value
In = the future value in n years
i = interest rate
n = the years in which the payment occurs
Present Net Worth
The present net worth criterion is one of the widely used and accepted investment criteria recognizing the time value of money. It is the algebraic sum of the discounted costs and revenues at a specified interest rate.
PNW= Present net worth
Rt= the revenue or positive cash flows in year t
Ct= the cost or negative cash flows in year t
t= the year in which the cash flows occurs
i= the interest rate
Analysis: An investment is acceptable if the PNW is positive and is not acceptable if it is negative.
Land expectation value
It is a special case of PNW that has certain restrictive assumptions made about it. These are :
- The land value is zero.
- The land has no residual stand
- The land will be forested in perpetuity.
- The cash flows from the forest will be the same in perpetuity.
Le= the land expectation value
Vo= the present value of a perpetual periodic annuity that will be every n years
n= the number of years between annuity payments
i= the interest rate
Analysis: Invest if land expectation value is greater than market value.
Why is an analytical tool important?
Analytical techniques provide guidelines for choosing between courses of action. They tell us what will happen if all assumptions and projections used in the analysis are fulfilled.
It guides in wisely utilization of available resources and making a worthwhile investment.