The Effect of Stochastic Oscillations in Property Rights Regimes on Forest Output in China
AbstractOver the past 60 years, forest tenure in China has oscillated unpredictably between private and common-property regimes. This policy-induced uncertainty has distorted land owners’ harvesting decisions and has lowered the value of China’s forest output. We provide an analytical framework for assessing these effects quantitatively and conclude that substantial losses in the net value of wood harvested over time have occurred. Understanding the consequences of this policy-induced uncertainty is particularly important since China is currently engaged in an ambitious plan to increase its domestic supply of timber. Contrary to the standard result in the literature that catastrophic risk—whether from natural disasters like forest fires or from government expropriation—necessarily leads to premature harvesting, we find that farmers may delay harvesting if sufficient compensation for loss is paid.
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Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-13-08.
Date of creation: 10 May 2013
Date of revision:
forest tenure risk; Faustmann model; optimal rotation period under uncertainty;
Other versions of this item:
- Salant, Stephen W. & Yu, Xueying, 2014. "The Effect of Stochastic Oscillations in Property Rights Regimes on Forest Output in China," Discussion Papers dp-13-08-rev, Resources For the Future.
- Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-07-05 (Agricultural Economics)
- NEP-ALL-2013-07-05 (All new papers)
- NEP-ENV-2013-07-05 (Environmental Economics)
- NEP-TRA-2013-07-05 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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