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Impact of storm risk on Faustmann rotation

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  • Loisel, Patrice

Abstract

Global warming may induce in Western Europe an increase in storms. Hence the forest managers will have to take into account the risk increase. We study the impact of storm risk at the stand level. From the analytical expressions of the Faustmann criterion and the Expected Long-Run Average Yield, we deduce in presence of storm risk the influence of criteria and of discount rate in terms of optimal thinnings and cutting age. We discuss the validity of using a risk adjusted discount rate (a rate of storm risk added to the discount rate) without risk to mimic the storm risk case in terms of optimal thinnings.

Suggested Citation

  • Loisel, Patrice, 2014. "Impact of storm risk on Faustmann rotation," Forest Policy and Economics, Elsevier, vol. 38(C), pages 191-198.
  • Handle: RePEc:eee:forpol:v:38:y:2014:i:c:p:191-198
    DOI: 10.1016/j.forpol.2013.08.002
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    References listed on IDEAS

    as
    1. Price, Colin, 2011. "When and to what extent do risk premia work? Cases of threat and optimal rotation," Journal of Forest Economics, Elsevier, vol. 17(1), pages 53-66, January.
    2. Patrice, Loisel, 2011. "Faustmann rotation and population dynamics in the presence of a risk of destructive events," Journal of Forest Economics, Elsevier, vol. 17(3), pages 235-247, August.
    3. Reed, William J., 1984. "The effects of the risk of fire on the optimal rotation of a forest," Journal of Environmental Economics and Management, Elsevier, vol. 11(2), pages 180-190, June.
    4. Staupendahl, Kai & Möhring, Bernhard, 2011. "Integrating natural risks into silvicultural decision models: A survival function approach," Forest Policy and Economics, Elsevier, vol. 13(6), pages 496-502, July.
    5. Holecy, Jan & Hanewinkel, Marc, 2006. "A forest management risk insurance model and its application to coniferous stands in southwest Germany," Forest Policy and Economics, Elsevier, vol. 8(2), pages 161-174, March.
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    Cited by:

    1. Rakotoarison, Hanitra & Loisel, Patrice, 2016. "The Faustmann model under storm risk and price uncertainty: A case study of European beech in Northwestern France," MPRA Paper 85114, University Library of Munich, Germany.
    2. Sauter, Philipp & Mußhoff, Oliver, 2015. "Forestry harvesting decisions in contrast to theory? Evidence from an economic experiment," 2015 Conference (59th), February 10-13, 2015, Rotorua, New Zealand 202579, Australian Agricultural and Resource Economics Society.
    3. Couture, Stéphane & Cros, Marie-Josée & Sabbadin, Régis, 2016. "Risk aversion and optimal management of an uneven-aged forest under risk of windthrow: A Markov decision process approach," Journal of Forest Economics, Elsevier, vol. 25(C), pages 94-114.
    4. Patrice Loisel & Guillerme Duvillié & Denis Barbeau & Brigitte Charnomordic, 2019. "EvaSylv: A user-friendly software to evaluate forestry scenarii including natural risk," Working Papers hal-02282504, HAL.
    5. Deegen, Peter & Matolepszy, Kai, 2015. "Economic balancing of forest management under storm risk, the case of the Ore Mountains (Germany)," Journal of Forest Economics, Elsevier, vol. 21(1), pages 1-13.
    6. repec:eee:forpol:v:97:y:2018:i:c:p:210-222 is not listed on IDEAS
    7. repec:eee:foreco:v:30:y:2018:i:c:p:58-70 is not listed on IDEAS
    8. repec:eee:foreco:v:30:y:2018:i:c:p:32-37 is not listed on IDEAS
    9. repec:eee:forpol:v:95:y:2018:i:c:p:46-56 is not listed on IDEAS

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