Adapting to frequent fires: Optimal forest management revisited

As the frequency and severity of wildfires escalates in many regions, the study of fire-resilient forestry practices becomes crucial. While forest owners may employ several silvicultural practices to mitigate fire damage, the analytical study of optimal forest management has been reduced to the effects of fire on optimal rotation only. The fundamental result of this literature date back to the early 1980s and has remained virtually uncontested since then. This paper develops an infinite rotation cycle forest model in which landowners optimally choose rotation age, volume, and timing of partial harvesting in the presence of fire risk. We show that this setting fundamentally changes earlier results. In particular, more frequent fires imply beginning commercial thinning sooner but not necessarily shortening the rotation age. Two numerical applications highlight the empirical relevance of our findings.