A long-run perspective on renewable resource use and amenity benefits: the case of forestry

Gregory S. Amacher, Markku Ollikainen and Mikko Puhakka

Journal of Environmental Economics and Policy, 2015, vol. 4, issue 2, 164-176

Abstract: We examine the existence and stability properties of the long-run equilibrium in an economy using forest resources for consumption and amenity benefits. We incorporate forest resources into an overlapping generations model as a factor of production, source of amenity benefits and store of value. We characterise dynamics and stability of steady-state equilibria with a logistic resource growth function, and demonstrate with parametric and numerical examples that a unique and stable equilibrium exists under a set of parameter restrictions. We show that the productivity of timber in production of consumption and the weight given to amenities substantially affect the steady-state equilibrium stock and its stability and dynamics. Especially, the higher the productivity of timber in production, the lower the steady-state forest stock.

Date: 2015
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DOI: 10.1080/21606544.2014.987830

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