Land allocation between a multiple-stand forest and agriculture under storm risk and recursive preferences

Gaspard Dumollard and Stéphane De Cara

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Abstract: This study aims to characterize steady-state land allocations between a multiple-stand forest and agriculture, when the forest is subject to a storm risk. The landowner is supposed to have recursive preferences, which permits to distinguish between in-tertemporal preferences and risk preferences. Using a stochastic dynamic programming model, we show that both land allocation and forest management depend on the risk and on both types of preferences at the steady-state. Risk aversion is shown to favor land allocation to agriculture and to reduce the forest average harvest age while the preference for a regular income is shown to favor forestry and to reduce the average harvest age.

Keywords: Land allocation; Forest management; Recursive preferences; Stochastic Dynamic Programming (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-agr, nep-env and nep-upt
Note: View the original document on HAL open archive server: https://hal.science/hal-01671595v1
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Published in Journal of Environmental Economics and Policy, 2018, 7 (3), pp.256-268. ⟨10.1080/21606544.2017.1409654⟩

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Journal Article: Land allocation between a multiple-stand forest and agriculture under storm risk and recursive preferences (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01671595

DOI: 10.1080/21606544.2017.1409654

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