Hedging Strategies in Forest Management

Marielle Brunette (), Stéphane Couture and Eric Langlais

MPRA Paper from University Library of Munich, Germany

Abstract: The paper focuses on forests management strategies for natural hazards of nonindustrial owners, in the case where the forest provides nontimber services. We introduce a basic two-period model where the private owner manages natural hazards on his forest thanks to the accumulation of savings on his individual income, or to the adoption of sylvicultural practices. We show that: 1/ the harvesting rule, in the presence of amenity services and a random growth rate for forest, is smaller than the one predicted under the Faustmann's rule; 2/ savings and sylvicultural pratices may be seen as perfectly substitutable tools for the management of natural hazards. However, our analysis predicts that the harvesting rule displays a specific sensibility to price effects and/or changes in the distribution of natural hazards, depending on whether forest owners opt for the financial strategy or undertake sylvicultural practices.

Keywords: Risk; Forest; Amenities; Savings and Sylvicultural Practices (search for similar items in EconPapers)
JEL-codes: D20 Q0 Q10 Q14 Q19 (search for similar items in EconPapers)
Date: 2007-09-29
New Economics Papers: this item is included in nep-agr, nep-cse and nep-env
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https://mpra.ub.uni-muenchen.de/5228/1/MPRA_paper_5228.pdf original version (application/pdf)

Related works:
Working Paper: Hedging strategies in forest management (2020)
Working Paper: Hedging Strategies in Forest Management (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:5228

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