In contrast, a forest grower who insists on 60-tear rotations will never harvest anything. The use of real data would not dilute the message that shorter rotations reduce risk. Trees which will compete with New Zealand forestry products are already in the ground. The market situation in 40 years is considerably more uncertain. Current high prices for wood could result in a rash of new plantings that increase supply and lower price.
Longer rotations have to be considered a greater market risk.
Summary The conventional way to bring together all the five components of profitability C price, volume, cost, timing and risk C is to use discounted cash flow analysis. There are two methods of doing this. Use of IRR or NPV with high discount rates will invariably favour Regime A over Regime B. Longer rotations will become more profitable only if premiums for quality increase substantially, or low discount rates come into vogue. The latter is unlikely to happen unless prevailing real interest rates fall to very low levels.