Forest management in the Iranian Caspian Forest is optimized via harvesting decisions based on individual trees. The theory of optimal control in discrete time, stochastic dynamic programming, is applied. The optimization program utilizes new basal area growth and volume functions for beech, estimated via data from the Iranian Caspian forest.
Recent information about the degree of price variation is used in the optimizations. The optimal control function is defined as a reservation price function, which is determined via backward recursion. The optimal reservation price function and the optimal expected present value function are determined for alternative levels of interest rate and risk. Furthermore, the optimal harvest year and optimal harvest diameter frequency distributions are determined for different degrees of risk and rate of interest.