Increasing concern about the reduction of many plant and animal species in many locales have led to reexamination of the criteria by which many sites are managed. Forest management practices, for example, are under review in order to determine whether mixed-species stands provide superior habitats. Much more uncertain, however, are understandings about the economic implications of mixed-species rather than single-species management practices, and almost not attention has been focused on how to reconcile both economic and ecological approaches. This project will consist of an application of modern stock-portfolio theory to problems of mixed-species stand management. Special attention will be given to assessing the degree to which stock- portfolio management practices can integrate financial risk-aversion and biological diversity considerations in commercial forest management practices. Theoretical developments will be tested using a mathematical programming model of the Blodgett Forest Research Station in the Sierra Nevada of California to evaluate the range of opportunities for economic risk reduction through species diversification. This project will provide valuable new insights into procedures for integrating advanced financial analysis procedures and ecological consideration into management of natural resources. In addition to its focused and theoretical contributions, it will demonstrate the potential for research that seriously addresses major problems using both social scientific and natural scientific perspectives.
