ABSTRACT
This chapter analyzes the effect of transportation (site specific) costs and the effect of mining (depletion) of the forest on the time path of the price and of the net price of timber in two forestry models. The models differ in that one has zero costs and the other has positive costs. The analyses yield the standard mining theory results for certain cases. They also yield extentions of these results for cases with growth of the harvested trees and/or regeneration on the harvested land. A major conclusion of the analysis is that mining of the forest can result in a growth rate of the net price of timber that is greater than, equal to, or less than the interest rate. The research was partially supported by the US Forest Service and the Weyerhauser Company Foundation through the Forest Economics and Policy Program of Resources for the Future.
