IDEAS home Printed from https://ideas.repec.org/a/eee/forpol/v13y2011i6p503-511.html
   My bibliography  Save this article

Financial consequences of losing admixed tree species: A new approach to value increased financial risks by ungulate browsing

Author

Listed:
  • Clasen, Christian
  • Griess, Verena C.
  • Knoke, Thomas

Abstract

The influence of ungulates on the growth of young trees is amply discussed in forestry literature, particularly game browsing. Although there are a few appraisal methods that consider negative long-term influences on forest regeneration, hitherto no approach has addressed the financial consequences of lost admixed tree species. A homogenised species composition may lead to an increased financial risk of a forest. Based on financial return and risk ratios of mixed forests, this paper derives the financial compensation that would be necessary to make acceptable the increased risk of pure forest for forest owners. In this conceptual case study we consider a two-species mixed forest (Norway spruce, Picea abies [L.] Karst. and European beech, Fagus sylvatica L.) and calculate a tree species composition with maximum financial return per unit of risk. The financial indicators were generated via 1000 Monte Carlo scenarios, which consider natural hazard risks as well as timber price fluctuations. In case of an assumed reduction of European beech in different mixed forests by 30 percentage points, a compensation rate for ungulate browsing of between 16 and 23 [euro] ha-Â 1Â yr-Â 1 was estimated. Compared to the annual gains of mixed-forest between 89 and 113 [euro] ha-Â 1Â yr-Â 1 for admixtures of beech between 70 and 30 percent, we consider this amount substantial and conclude that the appraisal of game browsing effects should include the changed risk profiles between homogenised and mixed forests.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:forpol:v:13:y:2011:i:6:p:503-511
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1389934111000736
    Download Restriction: Full text for ScienceDirect subscribers only

    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. Zakamouline, Valeri & Koekebakker, Steen, 2009. "Portfolio performance evaluation with generalized Sharpe ratios: Beyond the mean and variance," Journal of Banking & Finance, Elsevier, vol. 33(7), pages 1242-1254, July.
    2. Hyytiainen, Kari & Penttinen, Markku, 2008. "Applying portfolio optimisation to the harvesting decisions of non-industrial private forest owners," Forest Policy and Economics, Elsevier, vol. 10(3), pages 151-160, January.
    3. Gregory S. Amacher & Markku Ollikainen & Erkki A. Koskela, 2009. "Economics of Forest Resources," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012480, January.
    4. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    5. Wayne Y. Lee & Ramesh K. S. Rao, 1988. "Mean Lower Partial Moment Valuation and Lognormally Distributed Returns," Management Science, INFORMS, vol. 34(4), pages 446-453, April.
    6. Dieter, Matthias, 2001. "Land expectation values for spruce and beech calculated with Monte Carlo modelling techniques," Forest Policy and Economics, Elsevier, vol. 2(2), pages 157-166, June.
    7. Knoke, Thomas & Steinbeis, Otto-Emmanuel & Bösch, Matthias & Román-Cuesta, Rosa María & Burkhardt, Thomas, 2011. "Cost-effective compensation to avoid carbon emissions from forest loss: An approach to consider price-quantity effects and risk-aversion," Ecological Economics, Elsevier, vol. 70(6), pages 1139-1153, April.
    8. repec:eee:ecomod:v:210:y:2008:i:4:p:487-498 is not listed on IDEAS
    9. Roll, Richard, 1977. "A critique of the asset pricing theory's tests Part I: On past and potential testability of the theory," Journal of Financial Economics, Elsevier, vol. 4(2), pages 129-176, March.
    10. 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.
    11. Post, Thierry & van Vliet, Pim, 2006. "Downside risk and asset pricing," Journal of Banking & Finance, Elsevier, vol. 30(3), pages 823-849, March.
    12. Barreto,Humberto & Howland,Frank, 2006. "Introductory Econometrics," Cambridge Books, Cambridge University Press, number 9780521843195, April.
    13. Jun-ya Gotoh & Hiroshi Konno, 2000. "Third Degree Stochastic Dominance and Mean-Risk Analysis," Management Science, INFORMS, vol. 46(2), pages 289-301, February.
    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. repec:kap:jbioec:v:19:y:2017:i:2:d:10.1007_s10818-017-9247-x is not listed on IDEAS
    2. Hahn, W. Andreas & Härtl, Fabian & Irland, Lloyd C. & Kohler, Christoph & Moshammer, Ralf & Knoke, Thomas, 2014. "Financially optimized management planning under risk aversion results in even-flow sustained timber yield," Forest Policy and Economics, Elsevier, vol. 42(C), pages 30-41.
    3. repec:eee:ecomod:v:255:y:2013:i:c:p:58-69 is not listed on IDEAS
    4. 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.
    5. Grilli, Gianluca & Jonkisz, Jaroslaw & Ciolli, Marco & Lesinski, Jerzy, 2016. "Mixed forests and ecosystem services: Investigating stakeholders' perceptions in a case study in the Polish Carpathians," Forest Policy and Economics, Elsevier, vol. 66(C), pages 11-17.
    6. repec:eee:ecomod:v:305:y:2015:i:c:p:1-9 is not listed on IDEAS

    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:13:y:2011:i:6:p:503-511. See general information about how to correct material in RePEc.

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

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.