Acidification and timber supply with endogenous soil protection: a two-period model

Ville Ovaskainen
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Ville Ovaskainen: Finnish Forest Reseach Institute

Finnish Economic Papers, 1991, vol. 4, issue 1, 65-74

Abstract: The paper considers the potential impacts on timber supply of forest damage due to acidic and other pollutants. In a two-period model of harvest timing and forest investment, tree mortality and site degradation are represented by changes in the standing stock and the growth function, respectively. An exogenous growth decline is first shown to increase short-run supply and discourage investment. Where salvage is not feasible, mortality in the standing stock tends to reduce the current supply and renders its overall change indeterminate. Endogenous soil protection is then introduced. It is shown that the anticipated damage justifies measures to alleviate site degradation. Consequently, short-run supply is ambiguously effected. The paper concludes by considering the impacts of pollution on the long-run steady state supply.

Date: 1991
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