Implications of future climatic uncertainty on payments for forest ecosystem services: The case of the East Coast of New Zealand
Juan J. Monge,
Adam Daigneault (),
Leslie J. Dowling,
Duncan R. Harrison,
Shaun Awatere and
Ecosystem Services, 2018, vol. 33, issue PB, 199-212
Forestryâ€™s long-term nature and associated uncertainties play against its consideration in land-use decisions. This studyâ€™s objective was assessing the implications of uncertainty on the feasibility of afforesting erodible land with natives. The New Zealand example has global relevance enabling: innovative statistical representation of climatic uncertainty, economic uncertainty analysis due to existing payments for services, and the profitability of long-rotation species due to MÄ oriâ€™s socio-cultural aspirations. We complemented a deterministic optimisation approach with Monte-Carlo methods to identify optimal afforestation areas representing uncertainty probabilistically. With stochastic dominance/efficiency tests, relevant to landowners, we identified that the uncertainty and profitability of long-rotation species increase at low discount rates, plausible due to low opportunity costs and inter-generational aspirations (not possible in competitive circumstances). At low discount rates, the high profitability odds of the long-rotation alternative compensate its high uncertainty and make it the preferred one even for highly risk-averse owners. With a probabilistic cost-benefit analysis, relevant to policymakers, we identified that the benefits necessary to cover erosion-reduction investments would need to be higher than expected to hedge against climatic uncertainty. These results were obtained through the uncertainty analysis. The methods/results covered in this study are relevant to land-use studies/models seeking to measure uncertainty impacts simply.
Keywords: Stochastic dominance; Land-use change; Climate change; Benefit-cost analysis; Spatial optimisation; Forest ecosystem services (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecoser:v:33:y:2018:i:pb:p:199-212
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