Hedging strategies in forest management

Marielle Brunette (), Stéphane Couture and Éric Langlais ()
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Éric Langlais: UFR AES - UFR Administration Economique et Sociale - Université Nancy 2

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Abstract: The paper focuses on the choice of forest management strategies for natural hazards by nonindustrial owners, when forest provides nontimber services. We introduce a basic two-period model where the private owner hedges against natural hazards on his/her forest thanks to financial strategies (accumulation of savings) or to the adoption of sylvicultural practices. We show that: 1/ the harvesting rule, in the presence of amenity services and a random growth rate for forest, is smaller than the one predicted under the Faustmann's rule; 2/ savings and sylvicultural pratices may be seen as perfectly substitutable tools. However, our analysis predicts that, depending on whether forest owners opt for the financial strategy or undertake sylvicultural practices, the harvesting rule displays a specific sensitivity to price effects and/or changes in the distribution of natural hazards.

Keywords: Risk; Forest; Amenities; Savings and Sylvicultural practices; Risque; Forêt; Aménités; Épargne et pratiques sylvicoles (search for similar items in EconPapers)
Date: 2020-06-06
Note: View the original document on HAL open archive server: https://hal.science/hal-01189403v1
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Related works:
Working Paper: Hedging Strategies in Forest Management (2007)
Working Paper: Hedging Strategies in Forest Management (2007)
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