Couture, Stéphane and Reynaud, Arnaud (2009) Forest Management under Fire Risk when Forest Carbon Sequestration Has Value. TSE Working Paper, n. 09-005

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Abstract

In this paper, we develop a multiple forest use model to determine the optimal harvest date for a forest stand producing both timber and carbon benefits under a risk of fire. The preferences of the representative non-industrial private forest (NIPF) owner are modeled though an expected utility specification. We introduce saving as a decision of the forest owner at any time. The problems of forest management and saving decisions are solved simultaneously using
a stochastic dynamic programming method. A numerical programming method is used to characterize the optimal forest and saving policies. We apply this framework to model the behavior of a representative NIPF owner located in the Southwest of France. The empirical application indicates that a higher risk of fire will decrease the optimal rotation period, while higher carbon prices will increase the optimal harvesting age. We show that increasing the risk of fire leads to a reduction in rotation duration. On the contrary, a higher carbon price makes carbon sequestration more profitable, thereby leading to increasing the rotation duration. We then show how the carbon price/risk of fire frontier is affected by risk aversion.

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• Forest Management under Fire Risk when Forest Carbon Sequestration Has Value. (deposited 18 Jan 2012 05:59) [Currently Displayed]
  • Forest management under fire risk when forest carbon sequestration has value. (deposited 09 Jul 2014 17:33)