Should Foresters Forecast?
Growth dynamics of forests will likely be altered by climate change. As these shifts are hard to predict, this paper asks whether forecasting them is necessary for profitable management. While unpredictability of climate change makes it hard to calculate expected profit losses of not forecasting, by using Monte Carlo simulations we can obtain an upper bound of these losses. We show that an owner following a rule of thumb, which completely ignores future changes and only observes changes as they come, will closely approximate optimal management. If changes are observed without too much delay, profit losses and errors in harvesting are negligible. This has implications for the effort foresters should devote to long run forecasting. It also implies the argument that boundedly rational agents may behave as if being fully rational has traction in forestry.