November marks 170 years since the birth of Professor Eižens Ostvalds, one of the most outstanding founders of forest science and forest management in Latvia.

Dr. Eižens Ostvalds was born on 4 November 1851 in Riga, the eldest son of the cooper master Gotfrīds Vilhelms Ostvalds (1824–1903) and his wife Elizabete Leiķele, in a family of three children. His middle brother, Vilhelms Ostvalds (1853–1932), was a chemist and 1912 Nobel Prize laureate; his youngest brother, Gotfrīds Ostvalds (1855–1918), was an entrepreneur and iron foundry owner.

Eižens Ostvalds studied forestry at the Tharandt Forest Academy, a famous centre for German forest science. At that time, such forest science celebrities and founders of forest economics as Pressler and Judeich worked there as professors. E. Ostvalds graduated from the academy in 1872, but left the renowned school with concerns regarding two central questions of forest economics. Firstly, the question of what the age of the main felling should be to ensure the greatest returns for the forest owner remained unanswered. Pressler’s main idea of financial maturity, which stems from the land rent theory, did not satisfy Ostvalds because in land rent theory, significant importance is assigned to the profit interest rate. By increasing the owner's desire for profit, the profit rate is increased, which in turn means accelerating financial turnover and reducing the age of the main felling. This can lead to an increase in the supply of thinner dimension round timber and a shortage of thicker dimension round timber.

Secondly, he could not agree with the opinion of Judeich, a representative of the same school, that the annual income from felling volumes is synonymous with forest rent, or in other words, the fruits of investment capital. Ostvalds saw a challenge in studying these issues and finding answers to them.

After graduating from the Tharandt Forest Academy in 1872, Eižens Ostvalds joined the Riga municipal forest service. After five years of practical work in the Olaine forest district, where he served first as assistant forest ranger and later as forest ranger, Ostvalds published his first scientific works in 1877 and 1878 in the publication "Baltische Wochenschrift". In these works, E. Ostvalds examines the problems of Baltic forest management and profitability, as well as the impact of drainage on tree growth. E. Ostvalds' practical and scientific activities did not go unnoticed. In 1878, Eižens Ostvalds was offered a docent position at the Riga Polytechnic School (Polytechnicum). At the same time, he worked in the Riga forest service, where from 1880 he led the management planning work for the city forests. The first object selected for forest management planning was the Jurgos – Dreiliņi forest district, where Prof. Beck had carried out triangulation, which served as the basis for all subsequent work. At the end of 1880, E. Ostvalds was sent to Germany to familiarise himself with forest melioration and forest management planning. Forest management planning for all city forests was completed in 1891. In 1882, Eižens Ostvalds took the position of Riga’s chief municipal forester. The “Relative Forest Rent Theory” he developed was put into practice, and income from Riga’s city forests increased rapidly. In the management of Riga’s city forests, E. Ostvalds became convinced of the practical application possibilities of the “Relative Forest Rent Theory”. This became particularly significant under conditions where the Riga City Council demanded an increase in the city treasury through dividends from forest property management and the conversion of forest lands into agricultural lands. Thanks to Ostvalds' activity, income from the sale of timber on lands earmarked for agricultural use was directed towards the implementation of forest melioration plans. E. Ostvalds was able to justify to the city fathers the relationship between the need to increase the value of forest capital and the future increase in forest rent. Melioration work was actively carried out in all forests belonging to Riga, but especially in the territory of the Olaine forest district. Under his leadership, in 1898, work began on creating a forest drainage system in the swampy forests between Ķekava, Plakanciems and Olaine, installing a 640 km long ditch system. The main drainage channel of this area of approximately 40 km2, the Skujenieki–Daugava canal, is also called the Ostvalds canal. This drainage channel was dug by hand in sandy, unstable soil and was also used for log floating. In 2003, SIA “Rīgas meži” installed a memorial sign for E. Ostvalds on the bank of the canal in the territory of the Ķekava parish.

Starting from 1888, the construction of forest ranger cordons and forest worker houses began in Riga’s city forests. The duties of the forest ranger position were changed. Forest rangers became salaried employees whose duties were linked to forest management and protection. The salary of forest rangers was high enough for them to hire servants. In 1903, telephones were installed in all forest ranger cordons, and the construction of fire-watch towers was completed. Until 1914, Riga’s municipal forestry experienced a boom.

For many years, E. Ostvalds was the secretary of the Baltic Foresters' Union.

One of E. Ostvalds' areas of activity was the refinement of forest taxation elements. In 1891, by interpolating from growth and yield tables created by the German forester Schwappach, which were intended for the regions of St. Petersburg and East Prussia (modern-day Poznań, Poland), he created growth and yield tables for pine and spruce for local conditions (Temporary Growth and Yield Tables). Eižens Ostvalds developed a new theory of forest management planning, which was linked to differential rent and associated felling ages. In 1903, he compiled tables and auxiliary tools for the use of appraisers into one book, which was a popular manual for appraisers for a long time.

To popularise the experience of managing Riga's city forests, the Baltic Foresters' Congress met in Riga in 1894, followed by the 10th All-Russian Foresters' Congress in 1903. In that same year, E. Ostvalds was elected as a corresponding member of the St. Petersburg Forest Institute.

As early as 1896, E. Ostvalds expressed the idea of the need to organise a Baltic Forest Management Bureau on behalf of the Livonian Economic and General Benefit Society. In 1907, this proposal was implemented. Its first employees were former appraisers from the Vidzeme Forest Management Bureau and the Russian Forest Department. Forest management planning was carried out according to instructions by forest districts, the boundaries of which were later adjusted to the boundaries of the forest administrative districts, also providing for the determination of forest types according to the classification recommended by K. Melderis.

The task of the bureau was to provide consultations to forest owners in the Livland and Courland governorates and to develop forest management plans. Soon after the bureau began its work, proposals were received from Estonia, as well as the St. Petersburg, Pskov, Mogilev and Voronezh governorates. By the start of the First World War, in seven years, the bureau's approximately 6–12 academically educated specialists managed about 200,000 hectares of forest in the Livland, Courland, Pskov and Voronezh governorates. The work was interrupted by the First World War.

In 1914, E. Ostvalds resigned from the leadership of the bureau. The Baltic Foresters' Society had agreed to the founding of a Forest Research Station, where E. Ostvalds hoped to continue his work as a scientist. This plan, too, was interrupted by the war.

In 1915, E. Ostvalds published the monograph “Fortbildungsvorträge über Fragen der Forstertragsregelung”, in which he described the “Theory of Relative Forest Rent”. This publication later became proof that E. Ostvalds was one of the first to substantiate the shortcomings of the then-dominant Faustmann Land Rent Theory and create a full-fledged alternative to it.

After the proclamation of the Republic of Latvia in 1918, E. Ostvalds, as the only one of the prominent Baltic German foresters, continued to work for the benefit of an independent Latvia. At first, he joined the Forest Department as an appraiser. When the Forestry Department was established at the University of Latvia in 1920, E. Ostvalds was elected as a docent in forest taxation, and in 1922 he became the first professor of forestry in Latvia. In 1923, at the suggestion of the Tharandt Academy, the University of Leipzig awarded him a doctorate in philosophy, and in 1926 the University of Latvia also awarded him an Honorary Doctorate in Forestry.

E. Ostvalds served as the head of the Department of Forest Taxation and Forest Management Planning until 1930, when he retired at the age of 79; however, he continued to work on his life's work – a book on the theory of forest rent. He submitted the prepared manuscript “Grundlinien einer im Anhalt an des relative Waldrenten – Maximum entwickelten forstlichen Reinertragstheorie (Waldrenttentheorie)” in an volume of approximately 23 printer's sheets to the article series of the Faculty of Agriculture of the University of Latvia.

The Council of the University of Latvia made the decision to print the manuscript, but funding for it was not allocated. The faculty did not have such financial resources, so its dean, P. Lejiņš, taking into account the outstanding value of the work, requested the Culture Fund Council in April 1931 to allocate funds for the publication of this work. However, the Culture Fund also delayed the allocation of the necessary funds.

Then Professor E. Ostvalds wrote to docent P. Lejiņš: “I have crossed the threshold of 80 years of life during this interval. Therefore, it was no surprise that my physical and mental strength has been waning recently. Further waiting could therefore lead to me soon no longer being able to carry out with the necessary confidence the correction work associated with printing the work. Moreover, I cherish the hope – which seems very easy to understand – to personally lead the conclusion of my life's work, which would be significantly hampered by months of delay. These reflections led me to the conclusion to print the book in a small edition at my own expense. As at my advanced age one cannot hope for the restoration of mental strength, and printing the book without my participation is not acceptable...” then Prof. E. Ostvalds requests “[..] that the University of Latvia retain its granted printing preferences no longer than April 1, 1932, or waive them even earlier if it sees fit, or if a severe illness or even my death were to occur before said date.”

Further in his letter, Prof. E. Ostvalds requested that the manuscript be returned for a short time in order to make a few corrections to it once more.

E. Ostvalds signed this letter on 11 November 1931, but just three months later, on 12 February 1932, he passed away.

Prof. E. Ostvalds' activity was not in vain. In 1931, his book “Grundlinien einer Waldrenttentheorie” was published, and E. Ostvalds' life's work was preserved for future generations. Rūdolfs Markuss, a student of Ostvalds and the first dean of the Faculty of Forestry of the Jelgava Academy of Agriculture, put a lot of effort into ensuring that the theory developed by Prof. E. Ostvalds was internationally recognised and popularised. Thanks to the book “Ostwald’s Relative Forest Rent Theory” published by R. Markuss in the United States in 1967 and his work at West Virginia University, Ostvalds' name occupies its rightful place among the world's most famous forest scientists.

Basic principles of Professor Eižens Ostvalds’ “Relative Forest Rent Theory”.

# The object of forest management, as well as determining the value of forest capital, is not an isolated forest stand, but a totality of them, within which sustainable use of forest resources can be ensured, and consequently, the preservation or increase of capital value;

# In forestry, core capital consists not only of land, production buildings and machines, forest roads, melioration systems, but also of the growing forest stock and other forest values;

# In a sustainable forest use system, costs for felling regeneration, as well as forest management, are counted as direct expenses. This means that increasing them cannot increase the value of forest capital.

# The value of forest capital can only be increased by measures related to forest capital, such as the reconstruction of low-value stands, drainage of forest lands, road construction, use of non-timber resources and similar measures;

# Forest land and the growing stock of trees are so closely economically linked that correctly determining their value separately is not possible. Optimising these measures is linked to discounting.

# E. Ostvalds expressed the theoretical basic conditions of forest rent in 18 theses (R. Markuss 1967, L. Linarts 1992):

# Purely mathematical conclusions in forest economics tend to be misleading if they are not subjected to economic verification;

# The deductive (from general judgments to individual ones) method is more limited in its use in forest economics than the inductive (from individual phenomena to general laws). It is not the normal forest, but rather the real forest, which is predominantly abnormal, that can reveal the internal laws of forestry;

# In forest economic theory, a forest cannot be evaluated as the arithmetic sum of individual stands;

# A forest stand with certain growth conditions and timber stock cannot be equated to a manufactured product; it is rather a product of nature, which has exchange value regardless of whether it is grown naturally or artificially;

# The economic unit is not formed by an individual stand, but by the forest as a whole, of which the stand is only a part;

# Core capital in forestry is represented not only by soil, buildings, and inventory, but also by the growing timber stock of the forest. In economics, the timber stock of an individual stand represents the economically justifiable costs of stand formation. Forest stand regeneration and administrative costs are not part of the core capital of the long-term production process;

# In the long cycle of forestry production, core capital is formed from rent and interest capital. Rent capital covers the growing timber stock and land, including roads, hydro-melioration and other capital improvements within it. Conversely, buildings, inventory and the reserve fund constitute interest capital. Rent capital is sensitive to improvements. A peculiarity is that the forest, as a product of nature, provides not only consumption rent but also accumulated rent, which forms from the unearned increase in timber prices. It is possible to significantly increase the accumulated rent by raising forest productivity through forest melioration and other measures. Only a small part of the accumulated rent can be realised immediately as the increment of annual felling. Interest capital is subject to the average interest rate in the local market;

# Forest stand stock and land form the total rent capital, which influences the variable and previously unpredictable accumulated rent;

# The new version of the Pressler–Heyer–Judeich land rent theory cannot be a criterion of economic efficiency in forestry; it must be a forest rent theory with forest rent in place of land rent;

# It is impossible to determine the interest rate for a forest in advance. Values calculated based on an assumed most favourable interest rate have only comparative significance. The absolute values of specific forest capital and their rent cannot be determined in advance;

# In forestry, classic financial turnover should be rejected. It cannot serve as a measure of the desired productivity of forest capital, nor as an indicator of actual market demand;

# The proposed forest rent theory abandons the price-value principle, but is based on discounted or calculated value;

# The forest rent formula developed in place of M. Faustmann's formula is the fundamental formula of forest economics; they are mutually distinct and cannot exist within the scope of one theory;

# The most favourable annual felling in the planning period can be determined not based on age-class distribution, but only by comparing different management plans for a given forest;

# Forest income can be in the form of rent and capital, and expenses can be similar. Expenses can be free and tied. Free expenses occur when, as a result, additional income is obtained. According to this theory, expenses are tied if, within certain limits, greater additional income is generated. The amount of free expenses is determined by their minimum usage, but the majority of tied expenses can only be determined as the difference between income and costs;

# The fact that during a period of relative economic stability, timber assortment price ratios remain almost unchanged for several decades, allows the use of conditional prices in forestry calculations instead of variable prices, where permissible, i.e., the average value of price ratios over a decade, excluding unpredictable variable price increases. Conditional price allows us to talk about future market value, which does not create difficulties for the transition to real value, if the actual price increase is known;

# The long-term production cycle, observing the principle of continuity, does not end with timber harvesting, but with the afforestation of clearings. Regeneration costs are provided by the final yield of the stands (forest rent);

# The decision regarding target production and the applicable discount rate is made by the forest property management.

Bibliography
Markus, R. 1967. Ostwald’s Relative Forest Rent Theory. BLV Baierischer Landwirtshaftsverlag GmbH, München Basel Wien p.128;
Ostvalds, E. 1921. Mežu izmantošanas regulēšana no tautsaimniecības viedokļa un mežsaimniecības mērķi. Ekonomists.
Ostvalds E. 1929. Tāme un Rente. Mežsaimniecības rakstu krājums VII. Latvijas mežkopju savienības izdevums.
Ostwald, E. 1931. Grundlinien einer Waldrententheorie, Riga p.16.
Zviedre, A., Vasiļevskis, A. 2007. Mežierīcība Latvijā, Vizuālais Elements, 232 lpp.