Economic losses from natural disturbances in Norway spruce forests – A quantification using Monte-Carlo simulations

Thomas Knoke, Elizabeth Gosling, Dominik Thom, Claudia Chreptun, Anja Rammig and Rupert Seidl

Ecological Economics, 2021, vol. 185, issue C

Abstract: Changing forest disturbance regimes pose a major challenge for current day forestry. Yet our understanding of the economic impacts of disturbances remains incomplete. Existing valuations of losses from natural disturbances commonly exclude extreme events and neglect impacts on standing timber. Here we develop a new methodology to assess the economic impact of natural disturbances addressing these limitations. We couple an empirical function of forest growth with survival modelling for the example of Norway spruce (Picea abies), using Monte-Carlo simulations to quantify the economic losses from natural disturbances. We illustrate the effect of extreme disturbance events by analyzing the lowest (worst) 5% of simulated economic returns. Ranging between € −2,611 and −34,416 per hectare, disturbance-induced economic losses varied greatly, depending on the valuation approach applied. Accounting for extreme events and disturbance impacts on standing timber resulted in 262–1218% higher losses compared to damages derived with common valuation approaches that neglect these aspects. Furthermore, we demonstrate that refraining from salvage logging after extreme disturbances does not necessarily result in major economic losses for forest owners, indicating a potential cost-effective avenue to improve forest biodiversity. Our approach presents an important step towards quantifying the economic impacts of changing forest disturbance regimes.

Keywords: Climatic change; Economic loss; Monte-Carlo simulation; Survival probability; Extreme hazard events; Worst-case analysis (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:185:y:2021:i:c:s092180092100104x

DOI: 10.1016/j.ecolecon.2021.107046

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