Economics of Forest Resource Management

Language: English
 
Subject: Economics

Prerequisites:
Mathematical economics I or equivalent AND Microeconomics I or equivalent

 Objectives:

After having successfully completed the course, the student will

• acquire a coherent and comprehensive overview of the major issues involved in forest resource management
• have a good understanding of the economic principles of forest resource management
• have good knowledge and understating of the commonly applied forest economic models
• be able to apply a selection of economic tools to analyze typical forest resource management problems
• be able to present and discuss relevant research in the broader context of forest resource economics

Contents: The course will cover the following topics 

• Values of forest resources and their trade-offs
• Motivation, objectives, and techniques of forest resource management
• Purposes of economic analysis
• Timber management under conditions of certainty
  • Net present value as a criterion for forest resource management decision-making
  • Uneven-aged stand optimization model
  • Faustmann model
  • Linear programming (Model I and Model II)
  • Timber management under conditions of certainty
    • Decision-making under uncertainty and risk
    • Natural disaster and Reed’s model
    • Reservation price model
  • Multiple-use management
    • Hartman model
    • Multiple-criteria decision analysis
  • Sustainable forest management
    • Biodiversity
    • Climate change

Examination:
Individual assignments with seminar presentation.

Grade: Pass or Fail
Grading criteria shall be announced at the start of the course.

Implementation
Lectures 30 h
Computer exercises 15 h
Self studies and individual assignments: 110 h
Examination and course evaluation (including seminar presentation) 10 h
Totally 165 h

Literature (preliminary):

Amacher, G.S., M. Ollikainen and E. Koskela. 2009. Economics of forest resources, Mit Press Cambridge.

Johansson, P.-O. and  K.G. Löfgren (1985).The economics of forestry and natural resources : Per Olov Johansson and Karl Gustav Lofgren Basil Blackwell, Oxford, UK.

Brumelle, S., Stanbury, W. T., Thompson, W. A., Vertinsky, I., & Wehrung, D. (1990). Framework for the analysis of risks in forest management and silvicultural investments. Forest ecology and management, 36(2), 279-299.

 Kangas, A. S. and J. Kangas (2004). "Probability, possibility and evidence: approaches to consider risk and uncertainty in forestry decision analysis." Forest Policy and Economics 6(2): 169-188.

 Chang, S.J. 1984. Determination of the optimal rotation age: A theoretical analysis. Forest Ecology and Management 8(2): 137-147.

 Gong, P., Boman, M., & Mattsson, L. (2002). Multiple-use forest planning techniques (No. 212).

 Gong, P., Boman, M., & Mattsson, L. (2005). Non-timber benefits, price uncertainty and optimal harvest of an even-aged stand. Forest policy and economics, 7(3), 283-295.

 Gong, P., & Löfgren, K. G. (2007). Market and welfare implications of the reservation price strategy for forest harvest decisions. Journal of forest economics, 13(4), 217-243.

 Gong, P., & Lofgren, K. G. (2009). Modeling forest harvest decisions: advances and challenges. International Review of Environmental and Resource Economics, 3(3), 195-216.

 Hartman, R. (1976). The harvesting decision whena standing forest has valuea. Economic Inquiry, 14(1), 52-58.

 Johnson, K. N., & Scheurman, H. L. (1977). Techniques for prescribing optimal timber harvest and investment under different objectives--discussion and synthesis. Forest Science, 23(Supplement 18), a0001-z0001.

 Newman, D. H. (2002). Forestry's golden rule and the development of the optimal forest rotation literature. Journal of Forest Economics, 8(1), 5-27.

 Reed, W. J. (1984). The effects of the risk of fire on the optimal rotation of a forest. Journal of Environmental Economics and Management, 11(2), 180-190.

 Van Kooten, G. C., Binkley, C. S., & Delcourt, G. (1995). Effect of carbon taxes and subsidies on optimal forest rotation age and supply of carbon services. American Journal of Agricultural Economics, 77(2), 365-374.

Additional reading:

Gong, P., and K.G. Löfgren. 2008. Impact of risk aversion on the optimal rotation with stochastic price. Natural Resource Modeling 21(3): 385-415.

Zhou, W., & Gong, P. (2005). Multiple-use tradeoffs in Swedish mountain region forests. Forest Policy and Economics, 7(1), 39-52.

Yousefpour, R., Jacobsen, J. B., Thorsen, B. J., Meilby, H., Hanewinkel, M., & Oehler, K. (2012). A review of decision-making approaches to handle uncertainty and risk in adaptive forest management under climate change. Annals of forest science, 69(1), 1-15.