ABSTRACT
Time is crucial in many aspects of forest economics. It defines the units of resource use. It brings patterns of variation in costs and revenues. The long period between expenditure and ensuing benefit makes many forest investments inflexible and seemingly unprofitable under discounting protocols or less profitable than other land uses. Optimal forest rotation and thinning regime are strongly affected by the discount rate used, as are optimal intensity of silvicultural intervention and harvesting investment. Discounting favours maintenance of existing silvicultural systems, rather than adopting improved regimes. Long-term environmental values are made less important. Of the reasons given for discounting, the opportunity cost of investment funds argument assumes implausible reinvestment of revenues: opportunity cost can be dealt with more sophisticatedly. The time preference argument fatally misinterprets what people prefer, and neglects intergenerational justice. The diminishing marginal utility argument only applies to some classes of value. Risk is best treated by other protocols. The recently favoured declining discount rate protocol has questionable theoretical roots and creates major practical difficulties for forest economists. Apart from technical problems, internal rate of return as a choice criterion is ethically suspect. Foresters need to engage with these economic and ethical arguments.
