The purpose of this article is to discuss some aspects of forest management; its justification is the undoubted importance of forest-based industries to the Canadian economy, particularly Canada's foreign trade. Economists and those who administer forests are not agreed on the fundamentals of forest management. Nor have administrators agreed on the way in which forests should be utilized. We will, however, describe only one rule for forest management formulated by those responsible for administering forests—maximum sustained yield—and compare that rule with the results of capital theory.
In order to keep the analysis clear and to the point, a simplified example, based on an actual study, will be used throughout this paper. This example allows the divergent conclusions of capital theory to be illustrated and compared with the results of adopting maximum sustained yield, the rule recommended by the forester in the study from which the example is drawn.
The analysis here makes no pretence at originality and provides no new rule for managing forests. But it might serve to bring divergent groups closer to mutual understanding, and set the stage for some discussion of forest management by economists in Canada. It has been suggested, particularly by Professor Keirstead and Professor Scott, that no new theory of resources is needed because existing theory is adequate. On the other hand, Dr. Lamontagne and Dr. Keenleyside have suggested that economists have been remiss because they have neglected resources. These conflicting views indicate a need for an appraisal of existing theory concerning the administration of resources.