A long-run perspective on renewable resource use and amenity benefits: the case of forestry

We examine the existence and stability properties of the long-run equilibrium in an economy using forest resources for consumption and amenity benefits. We incorporate forest resources into an overlapping generations model as a factor of production, source of amenity benefits and store of value. We characterise dynamics and stability of steady-state equilibria with a logistic resource growth function, and demonstrate with parametric and numerical examples that a unique and stable equilibrium exists under a set of parameter restrictions. We show that the productivity of timber in production of consumption and the weight given to amenities substantially affect the steady-state equilibrium stock and its stability and dynamics. Especially, the higher the productivity of timber in production, the lower the steady-state forest stock.