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Divestment of the English Forestry Estate: An economically sound choice?

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  • King, Steven
  • Fraser, Iain

Abstract

This paper evaluates if the proposed divestment of the English Forestry Commission Estate in 2010 was economically rational. The analysis is composed of two parts. First, an amenity value threshold for continued public access to the Estate was estimated. Based on a stated value of the Estate (i.e. £700million) and assuming a discount rate of 3.5% the Estate should never have been considered for sale. However, assuming a discount rate of 5% then the associated critical amenity value was estimated to be approximately £5million. Second, travel cost methods were employed to value public access to the Forest of Dean as a proxy for the Estate. An on-site survey was conducted that yielded estimates of consumer surplus that exceed the critical amenity value of the Estate by two orders of magnitude even when we employ a discount rate above that typically used in public policy decision making. Therefore, we conclude that the policy to divest the Estate for £700million was not ‘a good deal’ and as such the resulting policy reversal was an economically sensible decision.

Suggested Citation

  • King, Steven & Fraser, Iain, 2013. "Divestment of the English Forestry Estate: An economically sound choice?," Ecological Economics, Elsevier, vol. 88(C), pages 25-31.
  • Handle: RePEc:eee:ecolec:v:88:y:2013:i:c:p:25-31
    DOI: 10.1016/j.ecolecon.2012.12.021
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    References listed on IDEAS

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    1. Willis, K G, 1991. "The Recreational Value of the Forestry Commission Estate in Great Britain: A Clawson-Snetsch Travel Cost Analysis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 38(1), pages 58-75, February.
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    5. Zandersen, Marianne & Tol, Richard S.J., 2009. "A meta-analysis of forest recreation values in Europe," Journal of Forest Economics, Elsevier, vol. 15(1-2), pages 109-130, January.
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    8. Beal, Diana J., 1995. "A Travel Cost Analysis of the Value of Carnarvon Gorge National Park for Recreational Use," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 0(Number 02), pages 1-12, August.
    9. Conrad, Jon M., 1997. "On the option value of old-growth forest," Ecological Economics, Elsevier, vol. 22(2), pages 97-102, August.
    10. K. G. Willis & G. D. Garrod, 1991. "An Individual Travel-Cost Method Of Evaluating Forest Recreation," Journal of Agricultural Economics, Wiley Blackwell, vol. 42(1), pages 33-42.
    11. David J. EVANS, 2006. "Social discount rates for the European Union," Departmental Working Papers 2006-20, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
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