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Assessing non-industrial private forest owners’ attitudes to risk: Do owner and property characteristics matter?

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  • Andersson, Mats

Abstract

This study relates owner and property characteristics to non-industrial private forest (NIPF) owners’ attitudes to financial risk-taking in forestry decisions. Using a two-period mean-variance setting, the harvesting decisions of NIPF owners are examined with the aim of measuring their willingness to take risks. Since willingness to pay for reduction of risk is empirically unobservable, I rely on an index of NIPF owners’ attitudes to risk from a hypothetical survey question involving financial risk. According to the index, respondents (owners) are categorized as risk-averse, risk-neutral or risk-seeking. I apply a probit analysis to test how owner and property characteristics influence the NIPF owners’ attitudes to risk. The results show that characteristics influence the formation of risk attitudes. More explicitly, a longer period of ownership increases the probability that the owner is risk-averse, while increased time in the forest conducting silvicultural work increases the likelihood that an owner is risk-seeking. The results also show that female NIPF owners are more risk-seeking than male owners. The study fills a knowledge gap in the literature, relating owner and property characteristics to management decisions. Inclusion of risk attitudes and the judgement of risks into studies of NIPF owners’ management can help to understand why NIPF owners’ harvesting may deviate from net present value maximisation.

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  • Andersson, Mats, 2012. "Assessing non-industrial private forest owners’ attitudes to risk: Do owner and property characteristics matter?," Journal of Forest Economics, Elsevier, vol. 18(1), pages 3-13.
    • Handle: RePEc:eee:foreco:v:18:y:2012:i:1:p:3-13
    DOI: 10.1016/j.jfe.2011.05.001
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    References listed on IDEAS

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    2. Josset, Clement & Shanafelt, David W. & Abildtrup, Jens & Stenger, Anne, 2023. "Probabilistic typology of private forest owners: A tool to target the development of new market for ecosystem services," Land Use Policy, Elsevier, vol. 134(C).
    3. Couture, Stéphane & Cros, Marie-Josée & Sabbadin, Régis, 2016. "Risk aversion and optimal management of an uneven-aged forest under risk of windthrow: A Markov decision process approach," Journal of Forest Economics, Elsevier, vol. 25(C), pages 94-114.
    4. Cipollaro, Maria & Sacchelli, Sandro, 2018. "Demand and potential subsidy level for forest insurance market in Demand and potential subsidy level for forest insurance market in Italy," 2018 Seventh AIEAA Conference, June 14-15, Conegliano, Italy 275647, Italian Association of Agricultural and Applied Economics (AIEAA).
    5. Degnet, Mohammed B. & Hansson, Helena & Hoogstra-Klein, Marjanke A. & Roos, Anders, 2022. "The role of personal values and personality traits in environmental concern of non-industrial private forest owners in Sweden," Forest Policy and Economics, Elsevier, vol. 141(C).
    6. Sauter, Philipp A. & Mußhoff, Oliver & Möhring, Bernhard & Wilhelm, Stefan, 2016. "Faustmann vs. real options theory – An experimental investigation of foresters’ harvesting decisions," Journal of Forest Economics, Elsevier, vol. 24(C), pages 1-20.
    7. Stéphane S. Couture & Marie-Josée Cros & Régis Sabbadin, 2014. "Risk preferences and optimal management of uneven-aged forests in the presence of climate change: a Markov decision process approach," Post-Print hal-02741407, HAL.
    8. Kilham, Philipp & Hartebrodt, Christoph & Schraml, Ulrich, 2019. "A conceptual model for private forest owners' harvest decisions: A qualitative study in southwest Germany," Forest Policy and Economics, Elsevier, vol. 106(C), pages 1-1.
    9. Sylvain Caurla & Antonello Lobianco, 2020. "Estimating climate service value in forestry : The case of climate information on drought for maritime pine in Southwestern France," Post-Print hal-03639335, HAL.
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    11. Sylvain Caurla & Antonello Lobianco, 2020. "Estimating climate service value in forestry : The case of climate information on drought for maritime pine in Southwestern France," Post-Print hal-02617889, HAL.

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    More about this item

    Keywords

    Risk; Attitudes; NIPF; Characteristics; Probit;
    All these keywords.

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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