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Research article2012Peer reviewed

Assessing non-industrial private forest owners' attitudes to risk: Do owner and property characteristics matter?

Andersson, Mats

Abstract

This study relates owner and property characteristics to non-industrial private forest (NIPF) owners' attitudes to financial risk-taking in forestry decisions. Using a two-period mean-variance setting, the harvesting decisions of NIPF owners are examined with the aim of measuring their willingness to take risks. Since willingness to pay for reduction of risk is empirically unobservable, I rely on an index of NIPF owners' attitudes to risk from a hypothetical survey question involving financial risk. According to the index, respondents (owners) are categorized as risk-averse, risk-neutral or risk-seeking. I apply a probit analysis to test how owner and property characteristics influence the NIPF owners' attitudes to risk. The results show that characteristics influence the formation of risk attitudes. More explicitly, a longer period of ownership increases the probability that the owner is risk-averse, while increased time in the forest conducting silvicultural work increases the likelihood that an owner is risk-seeking. The results also show that female NIPF owners are more risk-seeking than male owners. The study fills a knowledge gap in the literature, relating owner and property characteristics to management decisions. Inclusion of risk attitudes and the judgement of risks into studies of NIPF owners' management can help to understand why NIPF owners' harvesting may deviate from net present value maximisation. (C) 2011 Department of Forest Economics, SLU Umea, Sweden. Published by Elsevier GmbH. All rights reserved.

Keywords

Risk; Attitudes; NIPF; Characteristics; Probit

Published in

Journal of Forest Economics
2012, Volume: 18, number: 1, pages: 3-13 Publisher: ELSEVIER GMBH, URBAN & FISCHER VERLAG

    Sustainable Development Goals

    SDG5 Gender equality

    UKÄ Subject classification

    Economics
    Forest Science

    Publication identifier

    DOI: https://doi.org/10.1016/j.jfe.2011.05.001

    Permanent link to this page (URI)

    https://res.slu.se/id/publ/45744