Economics of Forest Resources

Transcription

1 Economics of Forest Resources Gregory S. Amacher Markku Ollikainen Erkki Koskela The MIT Press Cambridge, Massachusetts London, England

2 ( 2009 Massachusetts Institute of Technology All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the publisher. For information about special quantity discounts, please This book was set in Palatino on 3B2 by Asco Typesetters, Hong Kong. Printed and bound in the United States of America. Library of Congress Cataloging-in-Publication Data Amacher, Gregory S., 1962 Economics of forest resources / Gregory S. Amacher, Markku Ollikainen, and Erkki Koskela. p. cm. Includes bibliographical references and index. ISBN (hardcover : alk. paper) 1. Forests and forestry Economic aspects. I. Ollikainen, Markku, 1952 II. Koskela, Erkki, 1946 III. Title. SD393.A dc

3 Contents Preface xiii Organization of the Book xv I Basic Models 1 1 A Brief History of Forest Economics Thought Prehistory of Economic Analysis of the Optimal Rotation Period The Birth of the Optimal Rotation Framework The Faustmann Revival Revival of Age Class Models 8 2 The Faustmann Rotation Model Forest Growth Technology Properties 13 Box 2.1 Stand Growth and Its Properties Landowner Preferences and Assumptions Computing the Optimal Rotation Period Developing the Faustmann Formula 19 Box 2.2 Rotation Ages and Comparative Statics Comparison of Alternative Solutions Comparative Statics From Optimal Rotation Period to Timber Supply Forest Taxation in the Faustmann Model Harvest Taxes Property Taxes Modifications Timber Management Effort Duality 35

4 viii Contents Competing Land Uses A Life-Cycle Interpretation Summary 42 3 Hartman Models of Timber and Amenity Production Amenity Services Landowner Preferences over Amenity Services Determination of the Optimal Rotation Period Optimal Hartman Rotation Period 48 Box 3.1 Joint Production of Timber and Amenities 49 Box 3.2 Optimal Rotation Age in the Hartman Model Comparative Statics of the Hartman Model Timber Supply in the Hartman Model Effects of Forest Taxation Harvest Taxes Property Taxes Amenities from Interdependent Stands Spatial and Temporal Interdependence Optimal Rotation Age and Stand Interdependence Modifications Competing Land Uses Life-Cycle Models Forests and Carbon Sinks Summary 75 4 Two-Period Life-Cycle Models Two-Period Timber Production Model Harvesting Possibilities 78 Box 4.1 Short-Term Harvest Volumes in a Two-Period Model Landowner Preferences and Consumption Short-Term Harvesting Behavior Forest Taxation and Timber Supply 86 Box 4.2 Short-Term Harvesting Behavior Two-Period Amenity Production Model Joint Production of Timber and Amenity Services Landowner Preferences Harvesting and Amenity Production Forest Taxation 94 Box 4.3 Two-Period Amenity Model: Short-Term Harvest Volumes 95

5 Contents ix 4.3 Overlapping Generations Models General Features Bequests Modifications Some Extensions of Two-Period Models Incidence of Forest Taxation Summary 109 II Policy Problems Design of Forest Policy Instruments Optimal Taxation Faustmann Interpretations First-Best Taxation Absence of Government Revenue Constraint First-Best Taxation Presence of Neutral Tax and Revenue Constraint Second-Best Taxation Distortionary Tax and Revenue Constraint Optimal Taxation Hartman Interpretations First-Best Taxation Absence of Government Revenue Constraint First-Best Taxation Presence of Neutral Tax and Revenue Constraint Optimal Forest Taxation Absence of Neutral Tax 124 Box 5.1 Socially Optimal Forest Tax Rates Optimal Taxation Life-Cycle Interpretations Timber Production Joint Production of Timber and Amenity Services Optimal Taxation Overlapping Generations Interpretations Amenities as Private Goods Amenities as Public Goods Modifications Progressive Taxation Optimality of Progressive Forest Taxation Summary 141 Appendix 5.1 Derivation of Tax Formulas in Section Deforestation: Models and Policy Instruments Basic Forms of Deforestation Conversion to Agricultural Land Commercial Harvesting through Concessions Illegal Logging Fuel Collection Causes of Deforestation 149

6 x Contents 6.3 Forest Concessions Optimal Policy Design Absence of Corruption Optimal Policy Design Presence of Corruption Competing Land Uses and Deforestation 160 Box 6.1 An Example of Illegal Logging and Corruption Insecure Property Rights Land Allocation by the Private Market Land-Use Results Summary 179 Appendix 6.1 Comparative Statics of Land Allocation Conservation of Biodiversity in Boreal and Temperate Forests Conservation Networks Auctions for Biodiversity Conservation Basic Framework Optimal Bidding Parametric Solution Green Tree Retention 196 Box 7.1 Comparison of Simulation with the Actual TNV Outcomes Commercial Forests Socially Optimal Biodiversity Management First-Best Policy Instruments Retention Tree Volumes and Instruments Example Modifications Summary Forest Age Class Models Basic Structure A Model with No Competing Land Use A Model with Competing Land Uses Carbon Policies Uneven-Aged Forest Management Dynamic Problem Static Problem Timber Market Considerations Summary 233 Appendix 8.1 Reduction of First-Order Conditions (8.13i) (8.13v) 234 Appendix 8.2 Proof of Normality as an Optimal Stable Steady State 235

7 Contents xi III Advanced Topics Uncertainty in Life-Cycle Models Uncertainties and Risk Preferences Types of Uncertainties Risk-Bearing Behavior Timber Production under Uncertainty Timber Prices Real Interest Rates Forest Growth Forest Stock Amenity Production under Uncertainty Timber Prices Real Interest Rates Forest Growth Forest Stock Modifications Idiosyncratic Timber Price Risk Aggregate Risk Summary 262 Appendix 9.1 Disentangling Risk and Time 263 Appendix 9.2 Taylor Approximations and Distributions of Functions of Random Variables Risk of Catastrophic Events Stochastic Processes Faustmann Interpretations Arrival Rate Independent of Stand Age Arrival Rate Dependent on Stand Age Amenity Services Arrival Rate Independent of Stand Age Arrival Rate Dependent on Stand Age 282 Box 10.1 Risk of Fire Loss Modifications Partial Destruction of a Stand Costly Protection Summary 291

8 xii Contents 11 Stochastic Rotation Models Preliminaries Stochastic Processes and Ito s Lemma Stochastic Processes Ito s Lemma Continuous-Time Stochastic Optimal Stopping Harvesting Thresholds Single-Rotation Problem Ongoing-Rotations Problem Modifications Stochastic Interest Rates Stochastic Amenity Services Catastrophic Risks Summary 318 Appendix 11.1 Derivation of Equation (11.16) 320 Appendix 11.2 A Heuristic Proof of Equation (11.15) Dynamic Models of Forest Resources Dynamic Optimization Optimal Control Dynamic Programming and the Bellman Equation Applications of Optimal Control Theory Faustmann Interpretations Hartman Interpretations Old-Growth Forests: Mining, Amenity Benefits, and Deforestation Land-Use Interpretations A Note on the Stability of Steady States in Dynamic Models Applications of Dynamic Programming Perfect Foresight Interpretations A Note on Stochastic Interpretations Summary 349 Appendix: Mathematics Review 351 References 359 Author Index 387 Subject Index 393