Answer Happy

6. Assume the price of one cubic meter of timber is $1,500 and it costs $100 to harvest it. Consider a forest where the stock of timber evolves according to V(t)=10t+14.011 where t denotes "years after planting." Assume the cost of replanting trees after harvest is $100,000 and the site value of the land is $1,000,000, The risk-free interest rate equals 3%. a) According to the Wicksell rotation rule should the forest be harvested when t-42? Explain b) According to the Faustinann rotation rule should the forest be harvested when t-42? Explain. c) - In general, how do the Wicksell and Faustmann rule compare to each other? d) Assume now that there are nontimber forest benefits that are valued at $300,000. According to the modified Faustmann rotation rule should the forest be harvested when t=42? e) What could be an unintended consequence, globally, when environmentalists in the US and Canada advocate for longer harvest periods of forests in the US and Canada?