Figures in Forest Economics

Transcription

1 Figures in Forest Economics prepared by Daowei Zhang To accompany Forest Economics by Daowei Zhang and Peter H. Pearse Published by UBC Press, 211

2 Figure 1.1: A forest's economic value Total value of a forest Extractive value Non-extractive value Timber value (e.g., industrial timber, fuel wood) Non-timber value (e.g., fruits, nuts, mushrooms, livestock fodder, game) Ecosystem (environmental) service value (e.g., soil and water protection, biodiversity, climate mitigation) Preservation value (e.g., existence value, option value, bequest value)

3 Figure 2.1a: Relationship between output and inputs a Quantity of capital K b Isoquants for labour and capital L Quantity of labour

4 Figure 2.1b: Relationship between output and labour Total product Q Response of total output to changes in labour input when capital and other factors are held constant L Quantity of labour

5 Figure 2.1c: Relationship between output and labour: Law of diminishing marginal products Diminishing marginal product of labour MPP L L Quantity of labour

6 Figure 2.1: Relationship between output and inputs Quantity of capital Total product Q K a b Isoquants for labour and capital Response of total output to changes in labour input when capital and other factors are held constant Diminishing marginal product of labour MPP L L Quantity of labour

7 Figure 2.2: Isocost curve for capital and labour Quantity of capital A K L Quantity of labour B

8 Figure 2.3: Expansion path of efficient input combinations A Quantity of capital a Expansion path K b L Quantity of labour B

9 Figure 3.1: Decision tree for a pest control project C = $35, P =.2 C = $119,244 P =.24 infestation spray succeeds P =.8 P =.7 C = $35, P =.56 no infestation P =.2 C = $ P =.2 C = $84,244 P =.8

10 Figure 3.2: Correct and incorrect match of interest rate and timber price in forest investment analysis Real interest rate Nominal interest rate Real price Nominal price (biased against forest projects) (inflates the returns of forest projects) = correct match, = incorrect match.

11 Figure 3.3: Value of a pre-merchantable loblolly pine timber stand: Difference between discounting at age 3, when the stand is ready for a final harvest (valued at B), and at age 15, when the stand just becomes merchantable (valued at A)

12 Figure 4.1: Market supply, demand, and net value of a forest product d Price ($) Supply p Consumer surplus e s Producer surplus Factor costs Demand q Annual quantity (cubic metres)

13 Figure 4.2: Relative elasticity and welfare change resulted from an increase in supply S 1 E 1 P 1 A C S 2 P 2 B E 2 Price ($) D Q 1 Q 2 Quantity

14 Figure 4.3: Linkage among stumpage, log, and forest products markets + Logging and transportation costs + Manufacturing costs Standing timber Delivered logs Forest Products

15 Figure 4.4: Prices for softwood lumber, sawlogs, and sawtimber stumpage in the southern United States: (MBF = thousand board feet)

16 Figure 4.5: Derived demand for pulpwood in newsprint production Price ($) B Supply of all factors other than pulpwood in newsprint production A Demand for newsprint Quantity of newsprint C Demand for pulpwood Price ($) Quantity of pulpwood

17 Figure 4.6: Timber demand and supply for timber in short and long-run Price ($) Short-run supply Long-run supply p Equilibrium price Very long-run supply Demand q Quantity of timber demanded and supplied per period

18 Figure 4.7: Long-run supply response when demand shifts upward P S 2 (S 21 ) S 25 P 21 b S 2-5 $ per unit P 25 c P 2 a D 21-5 Q 2 D 2 Q 21 Q 25 Q Quantity

19 Figure 4.8: Relationship between net value of timber and economically recoverable inventory Net value ($ per cubic metre) Total inventory Economically recoverable inventory Most valuable stands Extensive margin + Quantity of timber (cubic metres) Least valuable stands

20 Figure 4.9: Long-run timber supply projection Supply of timber per year (cubic metres) Years from the present

21 Figure 5.1: Market demand and consumer surplus d Price ($) p Consumer surplus s p s Total payment d q Quantity demanded

22 Figure 5.2: Equilibrium level of recreation consumption at two levels of fixed cost Z Income ($) Y T X V X T M I V M II Q M Q X R M R X Recreation days

23 Figure 5.3: Zones of travel origin to a recreational site Recreational site Zone 1 Zone 2 Zone 3 Zone 4

24 Travel cost ($) Hypothetical price ($) Figure 5.4: Derivation of the demand curve for a recreational site from travel costs A B Zone 3 Relationship between travel cost and participation rate Zone Demand curve 1 Zone Participation rate (%) 1, 2, 3, 3, Number of visits

25 Figure 5.5: Effect of crowding on demand for a recreational opportunity Price ($) Uncrowded Crowded Quantity demanded

26 Figure 6.1: Efficient application of labour to a forest site Value of the forest crop ($ per hectare) Marginal revenue product of labour ($) p Land rent Payment to labour Efficient quantity of labour Quantity of labour (person-days) Wage q Quantity of labour (person-days)

27 Figure 6.2: Relationship between price of timber and productive timberland Price ($) p Rent e Supply q Demand Annual harvest (cubic metres) Productive timberland (hectares) 1 m

28 Figure 6.3: Efficient allocation of land among different uses a Land rent ($) Commercial b Residential c Farming d Forestry Distance from urban centre (kilometres) e

29 Figure 6.4: Types of production possibilities for two products on a tract of land Cubic metres of timber per year T A Competing uses R Recreation days per year T B T C Mutually exclusive uses Highly conflicting uses R R T D Constantly substitutable uses R T E Independent uses R T F Complementary uses R

30 Figure 7.1: Growth in volume and stumpage value of a forest as it increases in age Value or volume of timber S(t) Value Q(t) Volume Average and incremental growth in value ($ per hectare per year) Rate of growth S/S(t) in stumpage value (% per year) Average growth Optimal harvest age for a single crop Age (years) Incremental growth S(t)/t S Age (years) i S/S(t) Age (years) t *

31 Figure 7.2: Optimal economic rotation for continuous forest crops Annual costs and returns ($) Incremental growth in value S/S(t) i t F t * Rotation age (years)

32 Figure 7.3: Incremental growth in value and costs with stand age

33 Figure 7.4: Relationship between stand age and various amenity values N(t) IV III II Stand age I t

34 Figure 8.1: Per-acre annual growth, removal, and inventory on private timberland in the US,

35 Thousands of acres Figure 8.2: Age-class distribution of inventory in private timberland in western Oregon, ,2 1, >79 Stand Age (years)

36 Figure 9.1: Forest area in the United States by region,

37 Figure 9.2: Real price indices for lumber and stumpage, in terms of 1992 prices (1992 = 1)

38 Figure 9.3: The Erie Canal

39 Figure 9.4: Optimal reforestation effort, E*, changes when stumpage price increases Marginal revenue product Cost or expected revenue per unit of effort ($/E) w E*(P ) E*(P )

40 Figure 9.5: Private tree planting in the US South by ownership,

41 Figure 1.1: The Coase Theorem A Marginal costs imposed on fishermen Marginal benefits and costs ($) E MC B Marginal benefits associated with pulp output Q MB C Output per unit of time

42 Figure 1.2: Degrees of exclusiveness of forest tenure Reserves for special users Multiple quota rights Stinted users Restricted users Harvesting permits Exclusive users Licences Leases Uncontrolled access Unlimited users No property Complete property Freehold

43 Figure 1.3: Combinations of attributes in forest property Transferability Benefits conferred Duration Exclusiveness Comprehensiveness No property rights Security Incomplete property rights Complete property rights

44 Figure 11.1: Effect of a royalty or severance tax on the range of log quality that can be profitably harvested Cost, value per cubic metre Tax Marginal log with tax Marginal log without tax Harvesting cost Gross value Value net of tax g t g High Quality of log Low

45 Although the next two graphs (Figures 11.1a and 11.2b) do not appear in Forestry Economics, the material in these graphs are discussed on page 315 of the book. They are presented here to facilitate teaching and help students understand the relevant discussion on yield taxes.

46 Figure 11.1a: Effect of a yield tax that applies to the gross value of logs on the range of log quality that can be profitably harvested Cost, value per cubic metre Tax Marginal log with tax Marginal log without tax Harvesting cost Gross value g t g Value net of tax High Quality of log Low

47 Figure 11.1b: Effect of a yield tax that applies to the net value of logs on the range of log quality that can be profitably harvested Cost, value per cubic metre Tax Value net of tax Marginal log with tax Marginal log without tax Harvesting cost Gross value g t =g High Quality of log Low

48 Figure 11.2: The relative burden of tax S 2 S 1 Price ($) P c E 2 P 1 P p G F E 1 Q 2 D 2 Q 1 D 1 Quantity

49 Figure 12.1: Global export volume of different forest products,

50 Figure 12.2: Determination of price and quantity of plywood to be imported and exported when trade is free, transportation costs are negligible, and all else remains constant Price Country B Country A L M K P B P f T X S W V D B S B P A X D U S A D A Q B Quantity Q f Q A

51 Figure 12.3: US outward and inward foreign direct investment in forest industry in constant 2 US$,

52 Figure 12.4: Canadian outward and inward foreign direct investment in forest industry in 2 constant CND$,

53 Figure 13.1: The Environmental Kuznets Curve Environmental degradation Turning point income Per capita income

54 Figure 13.2: Direct and underlying causes of tropical deforestation Direct causes Underlying causes Natural causes Hurricanes Fires Pests Floods Resulting from human activity Agricultural expansion Cattle ranching Logging Mining and oil extraction Construction of dams Roads Agents Slash and burn farmers Agribusiness Cattle ranchers Miners Oil corporations Loggers Non-timber commercial corporations Market failures Unpriced forest goods and services Monopolies and monopolistic forces Mistaken policy interventions Wrong incentives Regulatory mechanisms Government investment Government weakness Concentration of ownership Weak property rights arrangements Illegal activities and corruption Broader socioeconomic & political causes Population growth and density Economic growth Distribution of economic and political power Excessive consumption Global warming War and political instability