1. As lumberjacks cut down ancient forests in the Pacific Northwest, spotted owl habitat disappears. One tract of forest in Oregon has been targeted for conservation. The numbers below (see Table on next page) indicate future values of preservation compared to logging using sustainable forestry techniques. The numbers assume future generations will be more appreciative of wildlife than we are. Values are given in net benefit terms (i.e., beyond costs of labor and capital).

1. Assuming a 5% discount rate, what is the present value of each use of this land over the 20-year time horizon? Which is the more efficient use of land? (Hint: Use Excel to do calculations.)
2. Assuming a 5% discount rate, what is the present value of a $200,000 preservation benefit in year 50? In year 100? What does this tell us about the economic significance of benefits received by the next generation of owl lovers?
3. Which is the more efficient use of land if you use a 2% discount rate? What does this tell us about the use of a discount rate?

Year	Preservation	PVNBpres	Logging	PVNBlog
1	$100,000		$175,000
2	$100,000		$175,000
3	$100,000		$175,000
4	$100,000		$175,000
5	$100,000		$175,000
6	$100,000		$175,000
7	$100,000		$175,000
8	$100,000		$175,000
9	$100,000		$175,000
10	$100,000		$175,000
11	$250,000		$175,000
12	$250,000		$175,000
13	$250,000		$175,000
14	$250,000		$175,000
15	$250,000		$175,000
16	$300,000		$175,000
17	$300,000		$175,000
18	$300,000		$175,000
19	$300,000		$175,000
20	$300,000		$175,000
	Totals