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Valuing the Impact of Large-Scale Ecological Change in a Market: The Effect of Climate Change on U.S. Timber

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  • Sohngen, Brent
  • Mendelsohn, Robert

Abstract

This paper establishes a methodology for valuing the impact of large-scale ecological changes in a market. Given the large capital stocks inherent in most ecological systems, the dynamic nature of most ecological change, and the dynamic response of markets, it is critical to build dynamic models to capture the resulting effects. This paper demonstrates how to construct such a model using the impacts of climate change on U.S. timber markets as an example. Across a wide range of scenarios and models, warming is predicted to expand timber supplies and thus benefit U.S. timber markets. Copyright 1998 by American Economic Association.

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  • Sohngen, Brent & Mendelsohn, Robert, 1998. "Valuing the Impact of Large-Scale Ecological Change in a Market: The Effect of Climate Change on U.S. Timber," American Economic Review, American Economic Association, vol. 88(4), pages 686-710, September.
  • Handle: RePEc:aea:aecrev:v:88:y:1998:i:4:p:686-710
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    Cited by:

    1. Ben Abdallah, Skander & Lasserre, Pierre, 2016. "Asset retirement with infinitely repeated alternative replacements: Harvest age and species choice in forestry," Journal of Economic Dynamics and Control, Elsevier, vol. 70(C), pages 144-164.
    2. repec:eee:foreco:v:29:y:2017:i:pb:p:118-127 is not listed on IDEAS
    3. McIntosh, Christopher R. & Shogren, Jason F. & Finnoff, David C., 2010. "Invasive species and delaying the inevitable: Valuation evidence from a national survey," Ecological Economics, Elsevier, vol. 69(3), pages 632-640, January.
    4. William D. Nordhaus & Robert Mendelsohn, 1999. "The Impact of Global Warming on Agriculture: A Ricardian Analysis: Reply," American Economic Review, American Economic Association, vol. 89(4), pages 1053-1055, September.
    5. Latta, G.S & Sjølie, H.K. & Solberg, B., 23. "Incorporating Climate Change Impacts in Forest Market Models," Scandinavian Forest Economics: Proceedings of the Biennial Meeting of the Scandinavian Society of Forest Economics, Scandinavian Society of Forest Economics, issue 44, May.
    6. repec:spr:climat:v:147:y:2018:i:1:d:10.1007_s10584-017-2124-8 is not listed on IDEAS
    7. Ben Abdallah, Skander & Lasserre, Pierre, 2017. "Forest land value and rotation with an alternative land use," Journal of Forest Economics, Elsevier, vol. 29(PB), pages 118-127.
    8. S. Niggol Seo, 2016. "The Micro-behavioral Framework for Estimating Total Damage of Global Warming on Natural Resource Enterprises with Full Adaptations," Journal of Agricultural, Biological and Environmental Statistics, Springer;The International Biometric Society;American Statistical Association, vol. 21(2), pages 328-347, June.
    9. Kelly, David L. & Kolstad, Charles D. & Mitchell, Glenn T., 2005. "Adjustment costs from environmental change," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 468-495, November.
    10. Wong, Grace Y. & Alavalapati, Janaki R. R., 2003. "The land-use effects of a forest carbon policy in the US," Forest Policy and Economics, Elsevier, vol. 5(3), pages 249-263, September.
    11. Sjølie, Hanne K. & Latta, Gregory S. & Adams, Darius M. & Solberg, Birger, 2011. "Impacts of agent information assumptions in forest sector modeling," Journal of Forest Economics, Elsevier, vol. 17(2), pages 169-184, April.
    12. Buongiorno, Joseph & Raunikar, Ronald & Zhu, Shushuai, 2011. "Consequences of increasing bioenergy demand on wood and forests: An application of the Global Forest Products Model," Journal of Forest Economics, Elsevier, vol. 17(2), pages 214-229, April.
    13. Latta, Gregory S. & Sjølie, Hanne K. & Solberg, Birger, 2013. "A review of recent developments and applications of partial equilibrium models of the forest sector," Journal of Forest Economics, Elsevier, vol. 19(4), pages 350-360.
    14. Guo, Christopher & Costello, Christopher, 2013. "The value of adaption: Climate change and timberland management," Journal of Environmental Economics and Management, Elsevier, vol. 65(3), pages 452-468.
    15. Seo, S. Niggol, 2010. "Managing forests, livestock, and crops under global warming: a micro-econometric analysis of land use changes in Africa," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(2), June.
    16. Dumortier, Jerome Robert Florian, 2011. "The impact of forest offset credits under a stochastic carbon price on agriculture using a rational expectations and real options framework," ISU General Staff Papers 201101010800001160, Iowa State University, Department of Economics.
    17. Settle Chad & Shogren Jason F, 2006. "Does Integrating Economic and Biological Systems Matter for Public Policy? The Case of Yellowstone Lake," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(1), pages 1-48, July.
    18. Skander BEN ABDALLAH & Pierre LASSERRE, 2015. "Optimum Forest Rotations of Alternative Tree Species," Cahiers de recherche 06-2015, Centre interuniversitaire de recherche en économie quantitative, CIREQ.

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