Tree Planting Subsidies and Land Use Switching between Forestry and Agriculture in the US South

Bin Mei, David N. Wear and Yanshu Li

Journal of Forest Economics, 2022, vol. 37, issue 3, 237-257

Abstract: A regime switching model based on real options shows that optimal land use switching boundaries are contingent upon the stochastic behavior (trend and volatility) of timberland and cropland returns, conversion costs, and return correlation. Using this modeling framework applied to timberland and cropland in the US South, tree planting subsidies are shown to increase forest area over baseline projections. However, timber supply feedbacks and partial eligibility for subsidies are shown to generate substantial benefit leakage. Given the context of market feedbacks it's not clear that tree planting subsidies alone are an effective policy instrument for expanding forest area.

Keywords: Decision marking under uncertainty; farmland and timberland investment; land economics; rural policy; stochastic process (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1561/112.00000546 (application/xml)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:now:jnljfe:112.00000546

Access Statistics for this article

More articles in Journal of Forest Economics from now publishers
Bibliographic data for series maintained by Lucy Wiseman ().