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Attitude towards Risk and Production Decision: An Empirical analysis on French private forest owners

Author

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  • Eric Nazindigouba Kere

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

  • Marielle Brunette

    (INRA - Institut National de la Recherche Agronomique)

  • Jérôme Foncel

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper deals with the forest owner’s attitude towards risk and the harvesting decision in several ways. First, we propose to characterize and quantify the forest owner’s attitude towards risk. Second, we analyze the determinants of the forest owner’s risk attitude. Finally, we determine the impact of the forest owner’s risk attitude on the harvesting decision. The French forest owner’s risk attitude is tackled by implementing a questionnaire, including a context-free measure borrowed from experimental economics. The determinants of the forest owner’s risk attitude and harvesting decision are estimated through a recursive bivariate ordered probit model. We show that French forest owners are characterized by a relative risk aversion coefficient close to 1. In addition, we found that the forest owner’s risk aversion is influenced positively and significantly by gender (female), age, and willingness to protect the environment, while the percentage of forest income in the total patrimony of the forest owner has a negative effect. Finally, we obtain that the forest owner’s risk aversion positively and significantly impacts the harvesting decision.

Suggested Citation

  • Eric Nazindigouba Kere & Marielle Brunette & Jérôme Foncel, 2015. "Attitude towards Risk and Production Decision: An Empirical analysis on French private forest owners," Working Papers halshs-01005200, HAL.
  • Handle: RePEc:hal:wpaper:halshs-01005200
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01005200v2
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    References listed on IDEAS

    as
    1. Serge Garcia & Éric Nazindigouba Kéré & Anne Stenger, 2014. "Econometric analysis of social interactions in the production decisions of private forest owners," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 41(2), pages 177-198.
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    Citations

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    Cited by:

    1. 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.
    2. Sauter, Philipp A. & Mußhoff, Oliver & Möhring, Bernhard & Wilhelm, Stefan, 2016. "Faustmann vs. real options theory – An experimental investigation of foresters’ harvesting decisions," Journal of Forest Economics, Elsevier, vol. 24(C), pages 1-20.
    3. Gaspard Dumollard & Stéphane De Cara, 2017. "Land allocation between a multiple-stand forest and agriculture under storm risk and recursive preferences," Post-Print hal-01671595, HAL.
    4. Petucco, Claudio & Abildtrup, Jens & Stenger, Anne, 2015. "Influences of nonindustrial private forest landowners’ management priorities on the timber harvest decision—A case study in France," Journal of Forest Economics, Elsevier, vol. 21(3), pages 152-166.
    5. Sauter, Philipp & Hermann, Daniel & Mußhoff, Oliver, 2015. "Risk attitudes of foresters, farmers and students: An experimental multimethod comparison," DARE Discussion Papers 1514, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    6. Sauter, Philipp & Hermann, Daniel & Musshoff, Oliver, 2016. "Risk attitudes of farmers, foresters and students: An experimental multimethod comparison," 2016 Conference (60th), February 2-5, 2016, Canberra, Australia 235515, Australian Agricultural and Resource Economics Society.
    7. Sauter, Philipp A. & Möllmann, Torsten B. & Anastassiadis, Friederike & Mußhoff, Oliver & Möhring, Bernhard, 2016. "To insure or not to insure? Analysis of foresters' willingness-to-pay for fire and storm insurance," Forest Policy and Economics, Elsevier, vol. 73(C), pages 78-89.

    More about this item

    Keywords

    Harvesting decision; Forest owner's risk attitude; Forest owner’s risk attitude; Risk aversion; Harvesting decision.;

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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