You are not currently logged in.
Access JSTOR through your library or other institution:
If You Use a Screen ReaderThis content is available through Read Online (Free) program, which relies on page scans. Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
The Valuation of Forestry Resources Under Stochastic Prices and Inventories
Randall Morck, Eduardo Schwartz and David Stangeland
The Journal of Financial and Quantitative Analysis
Vol. 24, No. 4 (Dec., 1989), pp. 473-487
Published by: Cambridge University Press on behalf of the University of Washington School of Business Administration
Stable URL: http://www.jstor.org/stable/2330980
Page Count: 15
You can always find the topics here!Topics: Prices, Timber, Forest management, Leases, Forest resources, Logging, Forest growth, Forest appraisal, Boundary conditions, Production policy
Were these topics helpful?See something inaccurate? Let us know!
Select the topics that are inaccurate.
Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Preview not available
A contingent claims approach to capital budgeting may be preferable to traditional methods were uncertainty and managers' strategic reactions to changing conditions are important. As an example of such a case, we solve the classical problem of the duration of an investment in forestry resources (i.e., when to cut down the trees) in the general case of stochastic output prices and stochastic natural growth rate and timber inventories. A contingent claims approach is used to value the forestry resources as a function of: (1) stochastic prices and inventories, and (2) an asymmetric, optimal production policy that incorporates the option to halt timber production temporarily.
The Journal of Financial and Quantitative Analysis © 1989 University of Washington School of Business Administration