The infinitely worried forest owner key biotopes and forest certification in a Faustmann model

Abstract

In this note, we consider a case when a forestry property may lose its market value through "political risk", illustrated here by it being classified as containing a key biotope. If a key biotope is found on a forest property in Sweden, the wood is almost impossible to sell. We show how the Faustmann formula is modified in this case and identify a "balance sheet" effect and a shortened rotation period. The theory seems to have some empirical support, given observed changes in bank lending contracts and alleged changes in forester's behavior to reduce the "political risk".

Published in

Journal of Forest Economics
2020, volume: 35, number: 1, pages: 69-73

SLU Authors

• Kriström, Bengt

  • Department of Forest Economics, Swedish University of Agricultural Sciences
    
  • Centre for Environmental and Resource Economics (CERE)
  • Umeå University

UKÄ Subject classification

Economics
Forest Science

Publication identifier

• DOI: https://doi.org/10.1561/112.00000502

Permanent link to this page (URI)

https://res.slu.se/id/publ/103247