IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_673.html
   My bibliography  Save this paper

Forest Rotations and Stand Interdependency: Ownership Structure and Timing of Decisions

Author

Listed:
  • Gregory S. Amacher
  • Erkki Koskela
  • Markku Ollikainen

Abstract

This paper extends the Hartman model to study the optimal rotation age of two interdependent stands when the stream of amenities produces from the two stands may be complements or substitutes, both in space and over time. In the presence of stand interdependence both the ownership structure and the sequence of decision making matters. Rotation age choices are examined and compared under a variety of equilibria, including Nash, Stackelberg, and sole owner cases which differ as to the level of commitment by landowners to their choices. We show that the sole owner’s rotation age is longer than the rotation age solved under both Nash and Stackelberg assumptions if the stands are spatial complements, but shorter if they are substitutes. The precise relationship between the Nash and Stackelberg rotation ages, and the qualitative properties of rotation ages in terms of timber prices, regeneration costs, and interest rates, also depend on how spatial substitutability and complementarity between stands evolves through time.

Suggested Citation

  • 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.
    • Handle: RePEc:ces:ceswps:_673
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo_wp673.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Weber, Christian E., 2000. "Two further empirical implications of Auspitz-Lieben-Edgeworth-Pareto complementarity," Economics Letters, Elsevier, vol. 67(3), pages 289-295, June.
    2. 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, vol. 79(2), pages 311-326.
    3. Koskela, Erkki & Ollikainen, Markku, 2001. "Forest Taxation and Rotation Age under Private Amenity Valuation: New Results," Journal of Environmental Economics and Management, Elsevier, vol. 42(3), pages 374-384, November.
    4. Bowes, Michael D. & Krutilla, John V., 1985. "Multiple use management of public forestlands," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 2, chapter 12, pages 531-569, Elsevier.
    5. Hartman, Richard, 1976. "The Harvesting Decision When a Standing Forest Has Value," Economic Inquiry, Western Economic Association International, vol. 14(1), pages 52-58, March.
    6. Chipman, John S., 1977. "An empirical implication of Auspitz-Lieben-Edgeworth-Pareto complementarity," Journal of Economic Theory, Elsevier, vol. 14(1), pages 228-231, February.
    7. Kannai, Yakar, 1980. "The ALEP definition of complementarity and least concave utility functions," Journal of Economic Theory, Elsevier, vol. 22(1), pages 115-117, February.
    8. Dixit, Avinash K, 1986. "Comparative Statics for Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 107-122, February.
    9. Markku Ollikainen & Erkki Koskela, 2001. "Optimal Private and Public Harvesting under Spatial and Temporal Interdependence," CESifo Working Paper Series 452, CESifo.
    10. Strang, William J, 1983. "On the Optimal Forest Harvesting Decision," Economic Inquiry, Western Economic Association International, vol. 21(4), pages 576-583, October.
    11. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, December.
    12. Stephen Polasky & Jeffrey D. Camm & Brian Garber-Yonts, 2001. "Selecting Biological Reserves Cost-Effectively: An Application to Terrestrial Vertebrate Conservation in Oregon," Land Economics, University of Wisconsin Press, vol. 77(1), pages 68-78.
    13. 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.
    14. 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.
    15. Samuelson, Paul A, 1974. "Complementarity-An Essay on the 40th Anniversary of the Hicks-Allen Revolution in Demand Theory," Journal of Economic Literature, American Economic Association, vol. 12(4), pages 1255-1289, December.
    Full references (including those not matched with items on IDEAS)

    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. Newman, D.H., 2002. "Forestry's golden rule and the development of the optimal forest rotation literature," Journal of Forest Economics, Elsevier, vol. 8(1), pages 5-27.
    2. Gregory, S. Amacher & Christine Conway, M. & Sullivan, Jay & Gregory, S. Amacher, 2003. "Econometric analyses of nonindustrial forest landowners: Is there anything left to study?," Journal of Forest Economics, Elsevier, vol. 9(2), pages 137-164.
    3. Warziniack, Travis & Sims, Charles & Haas, Jessica, 2019. "Fire and the joint production of ecosystem services: A spatial-dynamic optimization approach," Forest Policy and Economics, Elsevier, vol. 107(C), pages 1-1.
    4. Juutinen, Artti, 2008. "Old-growth boreal forests: Worth protecting for biodiversity?," Journal of Forest Economics, Elsevier, vol. 14(4), pages 242-267, November.
    5. Loisel, Patrice & Elyakime, Bernard, 2018. "How to manage a small-scale multi-use forest?," Journal of Forest Economics, Elsevier, vol. 32(C), pages 13-17.
    6. Uchida, Emi, 2005. "Optimal Timber Rotation on Multiple Stands with an Asymmetric Externality," 2005 Annual meeting, July 24-27, Providence, RI 19532, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. 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, vol. 9(8), pages 982-995, May.
    8. Malchow-Moller, Nikolaj & Strange, Niels & Thorsen, Bo Jellesmark, 2004. "Real-options aspects of adjacency constraints," Forest Policy and Economics, Elsevier, vol. 6(3-4), pages 261-270, June.
    9. Couture, Stéphane & Reynaud, Arnaud, 2011. "Forest management under fire risk when forest carbon sequestration has value," Ecological Economics, Elsevier, vol. 70(11), pages 2002-2011, September.
    10. Kline, Jeffrey D. & Alig, Ralph J. & Johnson, Rebecca L., 2000. "Forest owner incentives to protect riparian habitat," Ecological Economics, Elsevier, vol. 33(1), pages 29-43, April.
    11. 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, vol. 12(2), pages 104-110, February.
    12. Tahvonen, Olli & Salo, Seppo, 1999. "Optimal Forest Rotation within SituPreferences," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 106-128, January.
    13. Markku Ollikainen & Erkki Koskela, 2001. "Optimal Private and Public Harvesting under Spatial and Temporal Interdependence," CESifo Working Paper Series 452, CESifo.
    14. Alvarez, Luis H. R. & Koskela, Erkki, 2005. "Wicksellian theory of forest rotation under interest rate variability," Journal of Economic Dynamics and Control, Elsevier, vol. 29(3), pages 529-545, March.
    15. Rose, Steven K. & Chapman, Duane, 2003. "Timber harvest adjacency economies, hunting, species protection, and old growth value: seeking the dynamic optimum," Ecological Economics, Elsevier, vol. 44(2-3), pages 325-344, March.
    16. Rose, Steven K., 1999. "Public Forest Land Allocation: A Dynamic Spatial Perspective on Environmental Timber Management," Working Papers 127700, Cornell University, Department of Applied Economics and Management.
    17. Sun, Xing & Zhang, Daowei, 2020. "A theoretical and empirical analysis of joint forest production: Timber supply and amenity services," Forest Policy and Economics, Elsevier, vol. 115(C).
    18. Luis H. R. Alvarez & Erkki Koskela, 2003. "A General Approach to the Stochastic Rotation Problem with Amenity Valuation," CESifo Working Paper Series 857, CESifo.
    19. Jens Abildtrup & Jacques-Alexandre Laye & Maximilien Laye & Anne Stenger, 2012. "Irreversibility and Uncertainty in Multifunctional Forest Management Allocation," Post-Print hal-01072290, HAL.
    20. Edward E. Schlee & M. Ali Khan, 2022. "Money Metrics In Applied Welfare Analysis: A Saddlepoint Rehabilitation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(1), pages 189-210, February.

    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:ces:ceswps:_673. 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: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    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.