The Infinitely Worried Forest Owner Key Biotopes and Forest Certification in a Faustmann Model

Kriström, Bengt and Per-Olov Johansson

Journal of Forest Economics, 2020, vol. 35, issue 1, 69-73

Abstract: In this note, we consider a case when a forestry property may lose its market value through “political risk†, illustrated here by it being classified as containing a key biotope. If a key biotope is found on a forest property in Sweden, the wood is almost impossible to sell. We show how the Faustmann formula is modified in this case and identify a “balance sheet†effect and a shortened rotation period. The theory seems to have some empirical support, given observed changes in bank lending contracts and alleged changes in forester’s behavior to reduce the “political risk†.

Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:now:jnljfe:112.00000502

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