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.
Item Type: | Monograph (Working Paper) |
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Language: | English |
Date: | January 2009 |
JEL Classification: | C61 - Optimization Techniques; Programming Models; Dynamic Analysis D81 - Criteria for Decision-Making under Risk and Uncertainty Q23 - Forestry |
Subjects: | B- ECONOMIE ET FINANCE |
Divisions: | TSE-R (Toulouse) |
Institution: | Universite Toulouse 1 Capitole |
Site: | UT1 |
Date Deposited: | 18 Jan 2012 05:59 |
Last Modified: | 02 Apr 2021 15:36 |
OAI Identifier: | oai:tse-fr.eu:22034 |
URI: | https://publications.ut-capitole.fr/id/eprint/3189 |
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