IDEAS home Printed from https://ideas.repec.org/a/spr/joecth/v69y2020i3d10.1007_s00199-019-01175-x.html
   My bibliography  Save this article

Irreversibility and the economics of forest conservation

Author

Listed:
  • Adriana Piazza

    (Universidad Adolfo Ibáñez)

  • Santanu Roy

    (Southern Methodist University)

Abstract

Regenerating forest on land used for non-forest economic activities can be difficult; this introduces some irreversibility in the process of deforestation. We analyze the effect of such irreversibility (reforestation cost) on the efficiency of forest conservation in a general model of optimal forest management where trees are classified in age classes and land has alternative economic use. Irreversibility may lead to a continuum of optimal steady states that differ in the area under forest cover; increase in irreversibility can only add steady states with smaller forest cover. High irreversibility discourages expansion of forests but at the same time, makes it optimal to conserve a minimal forested area in the long run; in particular, it is optimal to maintain a forested area above a critical size if the initial forest cover lies above it, while forests that are initially smaller than the critical level are optimally managed at constant size. We characterize the exact condition under which it is optimal to avoid total deforestation; the extent of irreversibility does not matter for this. Weak irreversibility may be associated with cyclical fluctuations in optimal forest cover; we characterize upper and lower bounds on the forest cover along an optimal path.

Suggested Citation

  • Adriana Piazza & Santanu Roy, 2020. "Irreversibility and the economics of forest conservation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 69(3), pages 667-711, April.
    • Handle: RePEc:spr:joecth:v:69:y:2020:i:3:d:10.1007_s00199-019-01175-x
    DOI: 10.1007/s00199-019-01175-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s00199-019-01175-x
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s00199-019-01175-x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gregory S. Amacher & Markku Ollikainen & Erkki A. Koskela, 2009. "Economics of Forest Resources," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012480, December.
    2. Ali Khan, M. & Piazza, Adriana, 2012. "On the Mitra–Wan forestry model: A unified analysis," Journal of Economic Theory, Elsevier, vol. 147(1), pages 230-260.
    3. Kenneth J. Arrow & Anthony C. Fisher, 1974. "Environmental Preservation, Uncertainty, and Irreversibility," Palgrave Macmillan Books, in: Chennat Gopalakrishnan (ed.), Classic Papers in Natural Resource Economics, chapter 4, pages 76-84, Palgrave Macmillan.
    4. Dow, James Jr. & Olson, Lars J., 1992. "Irreversibility and the behavior of aggregate stochastic growth models," Journal of Economic Dynamics and Control, Elsevier, vol. 16(2), pages 207-223, April.
    5. W. A. Brock, 1970. "On Existence of Weakly Maximal Programmes in a Multi-Sector Economy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 37(2), pages 275-280.
    6. Sargent, Thomas J., 1980. ""Tobin's q" and the rate of investment in general equilibrium," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 12(1), pages 107-154, January.
    7. Salo, Seppo & Tahvonen, Olli, 2003. "On the economics of forest vintages," Journal of Economic Dynamics and Control, Elsevier, vol. 27(8), pages 1411-1435, June.
    8. Arrow, Kenneth J & Kurz, Mordecai, 1970. "Optimal Growth with Irreversible Investment in a Ramsey Model," Econometrica, Econometric Society, vol. 38(2), pages 331-344, March.
    9. Olson, Lars J., 1989. "Stochastic growth with irreversible investment," Journal of Economic Theory, Elsevier, vol. 47(1), pages 101-129, February.
    10. Seppo Salo & Olli Tahvonen, 2004. "Renewable Resources with Endogenous Age Classes and Allocation of Land," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 513-530.
    11. Tapan Mitra & Henry Y. Wan, 1985. "Some Theoretical Results on the Economics of Forestry," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(2), pages 263-282.
    12. Claude Henry, 1974. "Option Values in the Economics of Irreplaceable Assets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(5), pages 89-104.
    13. David Cass, 1965. "Optimum Growth in an Aggregative Model of Capital Accumulation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(3), pages 233-240.
    14. Mitra, Tapan & Wan, Henry Jr., 1986. "On the faustmann solution to the forest management problem," Journal of Economic Theory, Elsevier, vol. 40(2), pages 229-249, December.
    15. Olli Tahvonen, 2004. "Optimal Harvesting Of Forest Age Classes: A Survey Of Some Recent Results," Mathematical Population Studies, Taylor & Francis Journals, vol. 11(3-4), pages 205-232.
    16. Angelsen, Arild & Kaimowitz, David, 1999. "Rethinking the Causes of Deforestation: Lessons from Economic Models," The World Bank Research Observer, World Bank, vol. 14(1), pages 73-98, February.
    17. Albers, Heidi J., 1996. "Modeling Ecological Constraints on Tropical Forest Management: Spatial Interdependence, Irreversibility, and Uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 73-94, January.
    18. Piazza, Adriana & Roy, Santanu, 2015. "Deforestation and optimal management," Journal of Economic Dynamics and Control, Elsevier, vol. 53(C), pages 15-27.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anthony Heyes & Sandeep Kapur, 2023. "The precautionary principle when project implementation capacity is congestible," Theory and Decision, Springer, vol. 95(4), pages 691-711, November.
    2. Salimova, Guzel & Ableeva, Alisa & Lubova, Tatiana & Sharafutdinov, Aidar & Araslanbaev, Irek, 2022. "Multidimensional modeling of the economy of forest management and reforestation," Ecological Modelling, Elsevier, vol. 472(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Khan, M. Ali, 2016. "On a forest as a commodity and on commodification in the discipline of forestry," Forest Policy and Economics, Elsevier, vol. 72(C), pages 7-17.
    2. Piazza, Adriana & Roy, Santanu, 2015. "Deforestation and optimal management," Journal of Economic Dynamics and Control, Elsevier, vol. 53(C), pages 15-27.
    3. Laukkanen, Matti & Tahvonen, Olli, 2023. "Wood product differentiation in age-structured forestry," Resource and Energy Economics, Elsevier, vol. 73(C).
    4. Fabbri, Giorgio & Faggian, Silvia & Freni, Giuseppe, 2015. "On the Mitra–Wan forest management problem in continuous time," Journal of Economic Theory, Elsevier, vol. 157(C), pages 1001-1040.
    5. Ali Khan, M. & Piazza, Adriana, 2012. "On the Mitra–Wan forestry model: A unified analysis," Journal of Economic Theory, Elsevier, vol. 147(1), pages 230-260.
    6. Tahvonen, Olli & Rautiainen, Aapo, 2017. "Economics of forest carbon storage and the additionality principle," Resource and Energy Economics, Elsevier, vol. 50(C), pages 124-134.
    7. Silvia Faggian & Giuseppe Freni, 2015. "A Ricardian Model of Forestry," Working Papers 2015:12, Department of Economics, University of Venice "Ca' Foscari", revised 2015.
    8. Heaps, Terry, 2015. "Convergence of optimal harvesting policies to a normal forest," Journal of Economic Dynamics and Control, Elsevier, vol. 54(C), pages 74-85.
    9. Kuusela, Olli-Pekka & Lintunen, Jussi, 2020. "Modeling market-level effects of disturbance risks in age structured forests," Forest Policy and Economics, Elsevier, vol. 118(C).
    10. Coordes, Renke, 2016. "The emergence of forest age structures as determined by uneven-aged stands and age class forests," Journal of Forest Economics, Elsevier, vol. 25(C), pages 160-179.
    11. Lintunen, Jussi & Uusivuori, Jussi, 2014. "On The Economics of Forest Carbon: Renewable and Carbon Neutral But Not Emission Free," Climate Change and Sustainable Development 165755, Fondazione Eni Enrico Mattei (FEEM).
    12. Terry Heaps, 2014. "Convergence of Optimal Harvesting Policies to a Normal Forest," Discussion Papers dp14-01, Department of Economics, Simon Fraser University.
    13. 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.
    14. 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.
    15. Adriana Piazza, 2009. "The optimal harvesting problem with a land market: a characterization of the asymptotic convergence," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(1), pages 113-138, July.
    16. Xabadia, Angels & Goetz, Renan U., 2010. "The optimal selective logging regime and the Faustmann formula," Journal of Forest Economics, Elsevier, vol. 16(1), pages 63-82, January.
    17. David Desmarchelier & Alexandre Mayol, 2022. "To seed, or not to seed? An endogenous labor supply approach in a simple overlapping generation economy," Bulletin of Economic Research, Wiley Blackwell, vol. 74(1), pages 25-38, January.
    18. Lintunen, Jussi & Uusivuori, Jussi, 2016. "On the economics of forests and climate change: Deriving optimal policies," Journal of Forest Economics, Elsevier, vol. 24(C), pages 130-156.
    19. M. Ali Khan & Adriana Piazza, 2010. "On uniform convergence of undiscounted optimal programs in the Mitra–Wan forestry model: The strictly concave case," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(1), pages 57-76, March.
    20. Moriguchi, Kai & Ueki, Tatsuhito & Saito, Masashi, 2020. "Establishing optimal forest harvesting regulation with continuous approximation," Operations Research Perspectives, Elsevier, vol. 7(C).

    More about this item

    Keywords

    Irreversibility; Deforestation; Conservation; Optimal forest management; Renewable resources;
    All these keywords.

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:joecth:v:69:y:2020:i:3:d:10.1007_s00199-019-01175-x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.