Article thumbnail

Two-Part Tax Controls for Forest Density and Rotation Time

By J. Bradley Brown


Many forest amenities are derived not only from the age of the trees, but also from the density of the trees. When an externality such as erosion control is considered, clear-cutting results in much larger damages than occur with selective cutting. This paper extends current methodology, allowing firms to optimize over both rotation time and the commercial use percentage per acre. A two-part instrument, a "clear-cut" tax combined with a lump sum "licensing fee", controls for commercial use percentage and rotation time in a firm that does not internalize non-timber benefits. Optimal taxes are presented that correct the firm's suboptimal behavior. A two-part instrument is shown to remedy market failure when a private firm clear-cuts and harvests too soon, and when an overgrown forest is not privately optimal to maintain. Numerical analysis on a simple case, simulating a forest where the externality is erosion control shows the clear-cut tax policy's relevance for a variety of erosion severity scenarios and interest rates.Two-Part Tax, Forestry, Clear-cutting, Optimal Rotation, Externalities, Optimal Harvest, Resource /Energy Economics and Policy,

OAI identifier:
Downloaded from

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.

Suggested articles


  1. A Behavioral Model of Timber Supply,”
  2. A More Dynamic Economic Model of the Optimal Rotation of Multiple-Use Forests,”
  3. A Variational Technique for Determining Optimal Thinning and Rotational Schedules,” Forest Science
  4. Economics of Forestry in an
  5. Forest Taxation and Rotation Age under Private Amenity Valuation: New Results,”
  6. How do Non-timber Values Effect Douglas-fir Rotations?”
  7. (1999). Object-Oriented Matrix Programming Using Ox. 3 rd ed. London: Timberlake Consultants Press and Oxford:,
  8. On the Optimal Harvesting Decision,”
  9. Optimal Forest Taxation under Private Amenity Valuation,” Forest Science 49(2003):596-605.
  10. Optimal Taxation: Timber and Externalities”
  11. Singular Path Solutions and Optimal Rates for Thinning Eve-Aged Forest Stands,” Forest Science
  12. The Harvesting Decision when the Standing Forest has
  13. The Harvesting Decisions When A Standing Forest with Multiple Age-Classes has Value,”
  14. (1961). The Yield of Douglas Fir in the Pacific Northwest,”