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Forest Management Under Fire Risk When Forest Carbon Sequestration Has Value

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  • Stéphane Couture
  • Arnaud Reynaud

Abstract

We develop a multiple forest use model to determine the optimal harvest date for a forest stand producing both timber and carbon benefits under a risk of fire. An empirical application is provided for a forest owner producing maritime pine in Southwest of France. Our results indicate that a higher risk of fire will decrease the optimal rotation period. On the contrary, higher carbon prices increase the optimal harvesting age. To investigate the contradictory effects of fire risk and carbon price on forest rotation, we identify the set of carbon prices and fire risks that lead to a given rotation age. We also show that forest owner's willingness to pay for a risk reduction can be substantial (37.33Â euros by ha and by year to reduce the annual fire risk from 1.26% to 0.07%).

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Bibliographic Info

Paper provided by LERNA, University of Toulouse in its series LERNA Working Papers with number 09.09.285.

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Date of creation: May 2009
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Handle: RePEc:ler:wpaper:09.09.285

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References

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  1. 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.
  2. Richard E. Howitt & Siwa Msangi & Arnaud Reynaud & Keith C. Knapp, 2005. "Estimating Intertemporal Preferences for Natural Resource Allocation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 969-983.
  3. Pohjola, J. & Valsta, L., 2007. "Carbon credits and management of Scots pine and Norway spruce stands in Finland," Forest Policy and Economics, Elsevier, vol. 9(7), pages 789-798, April.
  4. 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.
  5. Luis H. R. Alvarez & Erkki Koskela, 2004. "Taxation and Rotation Age under Stochastic Forest Stand Value," CESifo Working Paper Series 1211, CESifo Group Munich.
  6. Gregory S. Amacher & Arun S. Malik & Robert G. Haight, 2005. "Not Getting Burned: The Importance of Fire Prevention in Forest Management," Land Economics, University of Wisconsin Press, vol. 81(2).
  7. Jonathan Yoder, 2004. "Playing with Fire: Endogenous Risk in Resource Management," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 933-948.
  8. Gutrich, John & Howarth, Richard B., 2007. "Carbon sequestration and the optimal management of New Hampshire timber stands," Ecological Economics, Elsevier, vol. 62(3-4), pages 441-450, May.
  9. Kenneth L. Judd, 1998. "Numerical Methods in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262100711, December.
  10. Alvarez, Luis H.R. & Koskela, Erkki, 2006. "Does risk aversion accelerate optimal forest rotation under uncertainty?," Journal of Forest Economics, Elsevier, vol. 12(3), pages 171-184, December.
  11. Graeme Guthrie & Dinesh Kumareswaran, 2009. "Carbon Subsidies, Taxes and Optimal Forest Management," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 43(2), pages 275-293, June.
  12. Gong, Peichen & Löfgren, Karl-Gustaf, 2005. "Impact of Risk Aversion on Optimal Rotation Age," UmeÃ¥ Economic Studies 666, Umeå University, Department of Economics.
  13. Thompson, Matthew P. & Adams, Darius & Sessions, John, 2009. "Radiative forcing and the optimal rotation age," Ecological Economics, Elsevier, vol. 68(10), pages 2713-2720, August.
  14. Englin, Jeffrey E. & Boxall, Peter C. & Hauer, Grant, 2000. "An Empirical Examination Of Optimal Rotations In A Multiple-Use Forest In The Presence Of Fire Risk," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(01), July.
  15. Tahvonen, Olli & Salo, Seppo, 1999. "Optimal Forest Rotation within SituPreferences," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 106-128, January.
  16. Stavins, Robert & Newell, Richard, 1999. "Climate Change and Forest Sinks: Factors Affecting the Costs of Carbon Sequestration," Discussion Papers dp-99-31-rev, Resources For the Future.
  17. Adam J. Daigneault & Mario J. Miranda & Brent Sohngen, 2010. "Optimal Forest Management with Carbon Sequestration Credits and Endogenous Fire Risk," Land Economics, University of Wisconsin Press, vol. 86(1), pages 155-172.
  18. Cairns, Robert D. & Lasserre, Pierre, 2006. "Implementing carbon credits for forests based on green accounting," Ecological Economics, Elsevier, vol. 56(4), pages 610-621, April.
  19. ERKKI Koskela & MARKKU Ollikainen, 1997. "Optimal Design of Forest Taxation with Multiple-Use Characteristics of Forest Stands," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 10(1), pages 41-62, July.
  20. Tassone, Valentina C. & Wesseler, Justus & Nesci, Francesco S., 2004. "Diverging incentives for afforestation from carbon sequestration: an economic analysis of the EU afforestation program in the south of Italy," Forest Policy and Economics, Elsevier, vol. 6(6), pages 567-578, October.
  21. Guitart, A. Bussoni & Rodriguez, L.C. Estraviz, 2010. "Private valuation of carbon sequestration in forest plantations," Ecological Economics, Elsevier, vol. 69(3), pages 451-458, January.
  22. Reed, William J., 1984. "The effects of the risk of fire on the optimal rotation of a forest," Journal of Environmental Economics and Management, Elsevier, vol. 11(2), pages 180-190, June.
  23. COUTURE Stephane & REYNAUD Arnaud, 2006. "Multi-stand Forest Management Under a Climatic Risk: Do time and Risk Preferences Matter?," LERNA Working Papers 06.17.210, LERNA, University of Toulouse.
  24. Asante, Patrick & Armstrong, Glen W. & Adamowicz, Wiktor L., 2011. "Carbon sequestration and the optimal forest harvest decision: A dynamic programming approach considering biomass and dead organic matter," Journal of Forest Economics, Elsevier, vol. 17(1), pages 3-17, January.
  25. Benitez, Pablo C. & Obersteiner, Michael, 2006. "Site identification for carbon sequestration in Latin America: A grid-based economic approach," Forest Policy and Economics, Elsevier, vol. 8(6), pages 636-651, August.
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Citations

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Cited by:
  1. Cerdá, Emilio & Martín-Barroso, David, 2013. "Optimal control for forest management and conservation analysis in dehesa ecosystems," European Journal of Operational Research, Elsevier, vol. 227(3), pages 515-526.
  2. Anderson, Blake & M'Gonigle, Michael, 2012. "Does ecological economics have a future?," Ecological Economics, Elsevier, vol. 84(C), pages 37-48.
  3. Pukkala, Timo, 2011. "Optimizing forest management in Finland with carbon subsidies and taxes," Forest Policy and Economics, Elsevier, vol. 13(6), pages 425-434, July.
  4. Gren, Ing-Marie & Carlsson, Mattias & Elofsson, Katarina & Munnich, Miriam, 2012. "Stochastic carbon sinks for combating carbon dioxide emissions in the EU," Energy Economics, Elsevier, vol. 34(5), pages 1523-1531.
  5. Susaeta, Andres & Chang, Sun Joseph & Carter, Douglas R. & Lal, Pankaj, 2014. "Economics of carbon sequestration under fluctuating economic environment, forest management and technological changes: An application to forest stands in the southern United States," Journal of Forest Economics, Elsevier, vol. 20(1), pages 47-64.
  6. G. Cornelis van Kooten & Tim Bogle & Frans P. de Vries, 2012. "Rent Seeking and the Smoke and Mirrors Game in the Creation of Forest Sector Carbon Credits: An Example from British Columbia," Working Papers 2012-06, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.

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