IDEAS home Printed from https://ideas.repec.org/a/eee/forpol/v109y2019ics138993411930142x.html
   My bibliography  Save this article

Empirical analysis of the economic effect of tree species diversity based on the results of a forest accountancy data network

Author

Listed:
  • Wildberg, Johannes
  • Möhring, Bernhard

Abstract

The selection of tree species for the establishment of forest stands can be regarded as a financial investment with long-lasting economic consequence. This study applies empirical forest enterprise accounting data to investigate the theoretical concept of the diversification effect and its practical implications for forest tree species diversity. Based on the data of a forest accountancy data network in Germany, the effect of tree species diversity on risk and return was analyzed. The data revolves around the most relevant tree species groups in Germany including Norway spruce (Picea abies L. Karst), European beech (Fagus sylvatica L.), oak (Quercus spec.) and Scots pine (Pinus sylvestris L.). The data demonstrated a positive diversification effect as tree species diversity in forest enterprises was negatively correlated with the volatility of return. The observed volatility of return in forest enterprises was lower than the weighted return volatility of their underlying tree species. Analysis of the individual returns and volatilities revealed that the spruce generated the highest economic return and highest absolute volatility followed by the hardwood species and the pine. Furthermore, we showed that the premises behind the theory of the diversification effect are not always consistent with empirical data, particularly in regard to the stationarity assumption of times series.

Suggested Citation

  • Wildberg, Johannes & Möhring, Bernhard, 2019. "Empirical analysis of the economic effect of tree species diversity based on the results of a forest accountancy data network," Forest Policy and Economics, Elsevier, vol. 109(C).
    • Handle: RePEc:eee:forpol:v:109:y:2019:i:c:s138993411930142x
    DOI: 10.1016/j.forpol.2019.101982
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S138993411930142X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.forpol.2019.101982?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Marielle Brunette & Arnaud A. Dragicevic & Jonathan Lenglet & Alexandra Niedzwiedz & Vincent Badeau & Jean-Luc Dupouey, 2014. "Portfolio Management of Mixed-Species Forests," Post-Print hal-01628375, HAL.
    2. Knoke, Thomas, 2008. "Mixed forests and finance -- Methodological approaches," Ecological Economics, Elsevier, vol. 65(3), pages 590-601, April.
    3. Roessiger, Joerg & Griess, Verena C. & Härtl, Fabian & Clasen, Christian & Knoke, Thomas, 2013. "How economic performance of a stand increases due to decreased failure risk associated with the admixing of species," Ecological Modelling, Elsevier, vol. 255(C), pages 58-69.
    4. Dragicevic, Arnaud & Lobianco, Antonello & Leblois, Antoine, 2016. "Forest planning and productivity-risk trade-off through the Markowitz mean-variance model," Forest Policy and Economics, Elsevier, vol. 64(C), pages 25-34.
    5. Clasen, Christian & Griess, Verena C. & Knoke, Thomas, 2011. "Financial consequences of losing admixed tree species: A new approach to value increased financial risks by ungulate browsing," Forest Policy and Economics, Elsevier, vol. 13(6), pages 503-511, July.
    6. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    7. Marutani, Teruhiko, 2010. "The effect of site quality on economically optimal stand management," Journal of Forest Economics, Elsevier, vol. 16(1), pages 35-46, January.
    8. William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, vol. 19(3), pages 425-442, September.
    9. André F. Perold, 2004. "The Capital Asset Pricing Model," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 3-24, Summer.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jitka Janová & Lenka Viskotová, 2022. "Optimal Conversion Management for Spruce-dominated Forests: the Case of Drahanska Highlands," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 70(3), pages 175-186.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Friedrich, Stefan & Paul, Carola & Brandl, Susanne & Biber, Peter & Messerer, Katharina & Knoke, Thomas, 2019. "Economic impact of growth effects in mixed stands of Norway spruce and European beech – A simulation based study," Forest Policy and Economics, Elsevier, vol. 104(C), pages 65-80.
    2. Bennett, Donyetta & Mekelburg, Erik & Williams, T.H., 2023. "BeFi meets DeFi: A behavioral finance approach to decentralized finance asset pricing," Research in International Business and Finance, Elsevier, vol. 65(C).
    3. Kamal, Javed Bin, 2012. "Optimal portfolio selection in ex ante stock price bubble and furthermore bubble burst scenario from Dhaka stock exchange with relevance to sharpe’s single index model," MPRA Paper 60610, University Library of Munich, Germany.
    4. Dragicevic, Arnaud & Lobianco, Antonello & Leblois, Antoine, 2016. "Forest planning and productivity-risk trade-off through the Markowitz mean-variance model," Forest Policy and Economics, Elsevier, vol. 64(C), pages 25-34.
    5. Marielle Brunette & Arnaud Dragicevic & Jonathan Lenglet & Alexandra Niedzwiedz & Vincent Badeau & Jean-Luc Dupouey, 2017. "Biotechnical portfolio management of mixed-species forests," Journal of Bioeconomics, Springer, vol. 19(2), pages 223-245, July.
    6. Hildebrandt, Patrick & Knoke, Thomas, 2011. "Investment decisions under uncertainty--A methodological review on forest science studies," Forest Policy and Economics, Elsevier, vol. 13(1), pages 1-15, January.
    7. Hany Shawky & Ronald Forbes & Alan Frankle, 1983. "Liquidity Services and Capital Market Equilibrium: The Case for Money Market Mutual Funds," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 6(2), pages 141-152, June.
    8. Giovanni Bonaccolto & Massimiliano Caporin & Sandra Paterlini, 2018. "Asset allocation strategies based on penalized quantile regression," Computational Management Science, Springer, vol. 15(1), pages 1-32, January.
    9. Hooi Hooi Lean & Michael McAleer & Wing-Keung Wong, 2013. "Risk-averse and Risk-seeking Investor Preferences for Oil Spot and Futures," Documentos de Trabajo del ICAE 2013-31, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico, revised Aug 2013.
    10. Figge, Frank & Hahn, Tobias & Barkemeyer, Ralf, 2014. "The If, How and Where of assessing sustainable resource use," Ecological Economics, Elsevier, vol. 105(C), pages 274-283.
    11. Klaus Schredelseker, 2012. "Finanzkrise — Mitschuld der Theorie?," Schmalenbach Journal of Business Research, Springer, vol. 64(8), pages 833-845, December.
    12. Bao, Te & Diks, Cees & Li, Hao, 2018. "A generalized CAPM model with asymmetric power distributed errors with an application to portfolio construction," Economic Modelling, Elsevier, vol. 68(C), pages 611-621.
    13. Stefan Lutz, 2012. "Effects of taxation on European multi-nationals’ financing and profits," Economics Discussion Paper Series 1214, Economics, The University of Manchester.
    14. Nolte, Ingmar & Voev, Valeri, 2007. "Panel intensity models with latent factors: An application to the trading dynamics on the foreign exchange market," CoFE Discussion Papers 07/02, University of Konstanz, Center of Finance and Econometrics (CoFE).
    15. Westner, Günther & Madlener, Reinhard, 2011. "Development of cogeneration in Germany: A mean-variance portfolio analysis of individual technology’s prospects in view of the new regulatory framework," Energy, Elsevier, vol. 36(8), pages 5301-5313.
    16. Mario Alejandro Acosta R., 2014. "Las acciones como activo de reserva para el Banco de la República," Documentos CEDE 11004, Universidad de los Andes, Facultad de Economía, CEDE.
    17. Esposito, Federico, 2022. "Demand risk and diversification through international trade," Journal of International Economics, Elsevier, vol. 135(C).
    18. Mădălina Antoaneta Rădoi & Alexandru Olteanu, 2016. "Optimization of the Financial Instruments Portfolio," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 4(1), pages 64-71, May.
    19. Wang, Christina Dan & Chen, Zhao & Lian, Yimin & Chen, Min, 2022. "Asset selection based on high frequency Sharpe ratio," Journal of Econometrics, Elsevier, vol. 227(1), pages 168-188.
    20. Teulon, Frédéric & Guesmi, Khaled & Mankai, Selim, 2014. "Regional stock market integration in Singapore: A multivariate analysis," Economic Modelling, Elsevier, vol. 43(C), pages 217-224.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:forpol:v:109:y:2019:i:c:s138993411930142x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/forpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.