Optimal public harvesting under the interdependence of public and private forests

This article studies the design of optimal public harvesting in an economy with multiple-use forestry and private timber supply, where amenity services of public forests are public goods but, depending on access restrictions, those of private forests may or may not be. Public and private forest stands are assumed to be either substitutes, independents, or complements in the valuation of amenity services, and public and private forests are perfect substitutes as factors of production in forest industry. Under exogenous timber prices and free access, public harvesting should be used only if the marginal willingness to pay to forego public harvesting is sufficiently less than that of private harvesting. Public harvesting with no access reduces to a situation where private and public forests are independents under free access. Allowing for endogenous timber prices with free access increases the desirability of public harvesting, while having no impact under no access. Public harvesting should be set to equate the marginal costs of public harvesting corrected for the change in private timber supply and its marginal benefits due to price changes.