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Research article - Peer-reviewed, 2020

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

Kriström, Bengt; Johansson, Per-Olov

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

Authors' information

Centre for Environmental and Resource Economics (CERE)
Umeå University
Johansson, Per-Olov
Stockholm School of Economics
Swedish University of Agricultural Sciences, Department of Forest Economics

UKÄ Subject classification

Economics
Forest Science

Publication Identifiers

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

URI (permanent link to this page)

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