The purpose of this series of technical notes is to provide BLM personnel with a tool for screening proposed investments in selected intensive forest management practices. Report #1 expands upon the principles of economics as defined in BLM Manual 9521 and 9522, as applied to the principles of forest management. The allocation of changes in timber growth and yield, due to intensive management practices, is termed the allowable cut effect. The allowable cut effect (AEC) is used in the analysis of proposed investments in timber production along with secondary benefits and costs to other multiple use resources. Sound planning requires that we must identify and bring together both the negative and positive aspects of any proposed management action. The biological response must be weighed against other multiple use impacts.