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Urban Development and Urban Deforestation

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  • Sofia Franco

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  • Antonieta Sa
  • Renato Rosa
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    Abstract

    Forests can play a major role in climate regulation by reducing levels of carbon dioxide and other greenhouse gases in the atmosphere. Forests also provide a range of other ecological goods and services such as biodiversity and watershed protection and amenity benefits. On the other hand, deforestation and suburban sprawl have substantially changed and fragmented our landscape. While the economic importance of open space and forest amenities and the implications of nontimber benefits for harvesting within the traditional Faustmann framework are well understood, the feedback effects between urban development and forest land changes are not. However, the development of a framework to fully exploit the interplay between urban development and deforestation may reinforce the workings of emission reduction programs if co-benefits from land-based mitigation are realized. The purpose of this paper is to offer a first step towards such framework. In particular, this paper has developed a model of a single forest owner operating with perfect foresight in a dynamic open-city environment that allows for switching between alternative competing land uses (forest and urban use) at some point in the future. The model also incorporates external values of an even-aged standing forest in addition to the value of timber when it is harvested. Timber is exploited based on a multiple rotation model a la Faustmann with clear-cut harvesting. In contrast to previous models, our alternative land use to forest land is endogenous. Within this framework, we study the problem of the private owner as well as that of the social planner, when choosing the time to harvest, the time to convert land and the intensity of development. We also examine the extent to which the two-way linkage between urban development and forest management practices (timber production and provision of forest amenities) contributes to economic efficiency and improvements in non-market forest benefits. Finally, we consider policy options available to a regulator seeking to achieve improvements in efficiency including anti-sprawl policies (impact fees and density controls) and forest policies such a yield tax. Numerical simulations illustrate our analytical results.

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    Bibliographic Info

    Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa11p1472.

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    Date of creation: Sep 2011
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    Handle: RePEc:wiw:wiwrsa:ersa11p1472

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    References

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    1. 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.
    2. Max, Wendy & Lehman, Dale E., 1988. "A behavioral model of timber supply," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 71-86, March.
    3. Hartman, Richard, 1976. "The Harvesting Decision When a Standing Forest Has Value," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 14(1), pages 52-58, March.
    4. Leggett, Christopher G. & Bockstael, Nancy E., 2000. "Evidence of the Effects of Water Quality on Residential Land Prices," Journal of Environmental Economics and Management, Elsevier, vol. 39(2), pages 121-144, March.
    5. Tyrvainen, Liisa & Miettinen, Antti, 2000. "Property Prices and Urban Forest Amenities," Journal of Environmental Economics and Management, Elsevier, vol. 39(2), pages 205-223, March.
    6. Englin, Jeffrey E. & Klan, Mark S., 1990. "Optimal taxation: Timber and externalities," Journal of Environmental Economics and Management, Elsevier, vol. 18(3), pages 263-275, May.
    7. 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.
    8. Matthew E. Kahn, 2000. "The environmental impact of suburbanization," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 19(4), pages 569-586.
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