Economic analysis of postwindthrow forest management: the cut-or-keep decision rule
Pablo Andrés-Domenech and
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Lilian Duband: UMR INRA – AgroParisTech, Laboratoire d’Economie Forestière, 54042 Nancy Cedex, France
No 2017-06, Working Papers - Cahiers du LEF from Laboratoire d'Economie Forestiere, AgroParisTech-INRA
Wind storms are one of the most important risks for forest management. After a storm hits a forest stand the forest owner has two possibilities: clear cut and start a new rotation or keep the standing trees until maturity. We compute the Land Expectation Value (LEV) under the risk of windthrow and introduce an endogenous rule to account for this decision. We compare the result with the alternative - often used in the literature- of clear cut and replant by default after each storm. We calibrated our model to represent maritime pine plantations in south-western France. Our results show that roughly 75% of the time it is profitable to keep the standing trees until maturity. So doing the forest owner may increase payoffs by up to 90% when the economic risk (i.e. probability of having a storm) is high. Although payoffs are sensitive to economic risk, the optimal rotation age does not change much with significant increases in the risk probability.
Keywords: Faustmann; land expectation value; optimal rotation age; risk; windthrow; wind storm; forestry; pine; plantation; Landes (search for similar items in EconPapers)
JEL-codes: Q20 Q23 Q54 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2017-06, Revised 2017-06
New Economics Papers: this item is included in nep-agr and nep-env
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