Should climate change make us think more about the economics of forest management?

Forest management agencies have budget constraints and continually face difficult questions regarding how much to invest in silviculture and when to harvest forests. Economic thought suggests these decisions should be guided by the pursuit of economic efficiency and tools like net present value (NPV) analysis. In forestry this would make use of the so-called Faustmann model and generally result in shorter rotation ages than the Maximum Sustained Yield (MSY) criterion, which is often used as a policy objective in forest management. The two approaches have caused tension and controversy between foresters and economists. Climate change is adding yet another uncertainty dimension to the forest management challenge. Global climate models suggest massive changes in climate this coming century that will surely affect forests. Here we use climate change as a backdrop to compare the MSY and Faustmann results for black spruce (Picea mariana) and white pine (Pinus strobus) in Ontario. Climate change is adding new risks to silvicultural investments. Our intent is not to "resolve" the management problem but highlight some issues and differences between the two approaches. We suggest that climate change could, or should, cause a resurgence of the debate over pursuit of intertemporal efficiency in forest management.