Optimal Evolution of Tree-Age Distribution for a Tree Farm

We characterize here the evolution of tree age distribution under optimal forest management. The object is to maximize the discounted sum of the yield in each period, this being an increasing, concave function of the timber harvested. For a family of simple models, it is found that tree age distributions always evolve into either a ‘Faustmann uniform distribution’ or ‘Faustmann cycles’ where all trees are cut at the Faustmann age.Contrary to the conclusions from the optimal growth literature, cyclical orbits can be optimal under any small but positive discount rate. Furthermore, such cyclicality is structurally stable, due to the reacheability constraints as implied by the underlying vintage asset structure.