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Divestment of the English Forestry Estate: An economically sound choice?

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  • King, Steven
  • Fraser, Iain

Abstract

This paper evaluates if the proposed divestment of the English Forestry Commission Estate in 2010 was economically rational. The analysis is composed of two parts. First, an amenity value threshold for continued public access to the Estate was estimated. Based on a stated value of the Estate (i.e. £700million) and assuming a discount rate of 3.5% the Estate should never have been considered for sale. However, assuming a discount rate of 5% then the associated critical amenity value was estimated to be approximately £5million. Second, travel cost methods were employed to value public access to the Forest of Dean as a proxy for the Estate. An on-site survey was conducted that yielded estimates of consumer surplus that exceed the critical amenity value of the Estate by two orders of magnitude even when we employ a discount rate above that typically used in public policy decision making. Therefore, we conclude that the policy to divest the Estate for £700million was not ‘a good deal’ and as such the resulting policy reversal was an economically sensible decision.

Suggested Citation

  • King, Steven & Fraser, Iain, 2013. "Divestment of the English Forestry Estate: An economically sound choice?," Ecological Economics, Elsevier, vol. 88(C), pages 25-31.
    • Handle: RePEc:eee:ecolec:v:88:y:2013:i:c:p:25-31
    DOI: 10.1016/j.ecolecon.2012.12.021
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    References listed on IDEAS

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