Economics of mixed-species forestry with ecosystem services

The Faustmann–Hartman setup is widely established for specifying the economics of forest values besides timber, but it is criticized as restrictive for capturing diversity values. We show that extending the model to cover diversity attributes, i.e., mixed species and internal heterogeneity within species, is not enough to overcome these restrictions. Additionally, it is necessary to extend forest harvesting regimes to cover thinning, continuous cover forestry, and the management of commercially useless trees. Restrictions in the Faustmann–Hartman setup are first shown analytically with optimized thinning but without tree size structures. The empirical significance of these findings is show…