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Optimal Private and Public Harvesting under Spatial and Temporal Interdependence

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  • Markku Ollikainen
  • Erkki Koskela
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    Abstract

    This paper extends the Hartman model to include the case where two adjacent stands may be interdependent in the provision of amenity services. We show first that the relationship between the focal and exogenous rotation age depends on the nature of their temporal interdependence, i.e., on what happens to the degree of substitutability or complementarity between the stands when the rotation age of the private focal stand changes. We then apply this analysis to the determination of public rotation age in a two-stage game where the government first decides upon its harvesting and private harvesting is chosen in the second stage. Several new rules are derived for the socially optimal design of public harvesting depending on the nature of interdependence between private and public stands as well as on whether citizens have access to private forests for recreation or not.

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    File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2001/wp-cesifo-2001-04/cesifo_wp452.pdf
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    Bibliographic Info

    Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 452.

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    Date of creation: 2001
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    Handle: RePEc:ces:ceswps:_452

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    Keywords: Substitutability/complementarity; amenity valuation; private and public rotation age;

    References

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    1. Snyder, Donald L. & Bhattacharyya, Rabindra N., 1990. "A more general dynamic economic model of the optimal rotation of multiple-use forests," Journal of Environmental Economics and Management, Elsevier, vol. 18(2), pages 168-175, March.
    2. Strang, William J, 1983. "On the Optimal Forest Harvesting Decision," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 21(4), pages 576-83, October.
    3. Weber, Christian E., 2000. "Two further empirical implications of Auspitz-Lieben-Edgeworth-Pareto complementarity," Economics Letters, Elsevier, Elsevier, vol. 67(3), pages 289-295, June.
    4. Swallow, Stephen K. & Parks, Peter J. & Wear, David N., 1990. "Policy-relevant nonconvexities in the production of multiple forest benefits," Journal of Environmental Economics and Management, Elsevier, vol. 19(3), pages 264-280, November.
    5. Jeffrey R. Vincent & Clark S. Binkley, 1993. "Efficient Multiple-Use Forestry May Require Land-Use Specialization," Land Economics, University of Wisconsin Press, vol. 69(4), pages 370-376.
    6. Stephen K. Swallow & Piyali Talukdar & David N. Wear, 1997. "Spatial and Temporal Specialization in Forest Ecosystem Management Under Sole Ownership," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 79(2), pages 311-326.
    7. Swallow Stephen K. & Wear David N., 1993. "Spatial Interactions in Multiple-Use Forestry and Substitution and Wealth Effects for the Single Stand," Journal of Environmental Economics and Management, Elsevier, vol. 25(2), pages 103-120, September.
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    Citations

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    Cited by:
    1. Vokoun, Melinda & Amacher, Gregory S. & Sullivan, Jay & Wear, Dave, 2010. "Examining incentives for adjacent non-industrial private forest landowners to cooperate," Forest Policy and Economics, Elsevier, Elsevier, vol. 12(2), pages 104-110, February.
    2. Alvarez, Luis H. R. & Koskela, Erkki, 2005. "Wicksellian theory of forest rotation under interest rate variability," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 29(3), pages 529-545, March.
    3. Gregory S. Amacher & Erkki Koskela & Markku Ollikainen, 2002. "Forest Rotations and Stand Interdependency: Ownership Structure and Timing of Decisions," CESifo Working Paper Series 673, CESifo Group Munich.
    4. Alvarez, Luis H.R. & Koskela, Erkki, 2003. "On Forest Rotation Under Interest Rate Variability," Discussion Papers, The Research Institute of the Finnish Economy 840, The Research Institute of the Finnish Economy.
    5. Koskela, Erkki & Ollikainen, Markku & Pukkala, Timo, 2007. "Biodiversity policies in commercial boreal forests: Optimal design of subsidy and tax combinations," Forest Policy and Economics, Elsevier, Elsevier, vol. 9(8), pages 982-995, May.
    6. Uchida, Emi, 2005. "Optimal Timber Rotation on Multiple Stands with an Asymmetric Externality," 2005 Annual meeting, July 24-27, Providence, RI, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 19532, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Rauscher, Michael & Barbier, Edward B., 2010. "Biodiversity and geography," Resource and Energy Economics, Elsevier, Elsevier, vol. 32(2), pages 241-260, April.
    8. Juutinen, Artti & Monkkonen, Mikko, 2004. "Testing alternative indicators for biodiversity conservation in old-growth boreal forests: ecology and economics," Ecological Economics, Elsevier, Elsevier, vol. 50(1-2), pages 35-48, September.
    9. Juutinen, Artti, 2008. "Old-growth boreal forests: Worth protecting for biodiversity?," Journal of Forest Economics, Elsevier, Elsevier, vol. 14(4), pages 242-267, November.
    10. Malchow-Moller, Nikolaj & Strange, Niels & Thorsen, Bo Jellesmark, 2004. "Real-options aspects of adjacency constraints," Forest Policy and Economics, Elsevier, Elsevier, vol. 6(3-4), pages 261-270, June.

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