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When the theory is not enough - valuation of forest resources with "efficiency" prices in practice

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  • Huhtala, Anni
  • Toppinen, Anne
  • Boman, Mattias

Abstract

In resource accounting, simple theoretical models built upon efficiency prices have been developed to capture changes in social welfare generated by natural resources. We examine whether changes in market stumpage prices, as proxies for efficiency prices, have actually reflected changes in the physical timber inventories in Finland and Sweden during the past seventy years. Cointegration and unit root tests show that no long-term equilibrium relationships exist between the timber prices and stocks. After identifying a potential reason for the result, the basic theoretical growth model is slightly elaborated to provide a more appropriate framework for measuring net domestic product for the forest sector.
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Suggested Citation

  • Huhtala, Anni & Toppinen, Anne & Boman, Mattias, 2003. "When the theory is not enough - valuation of forest resources with "efficiency" prices in practice," Journal of Forest Economics, Elsevier, vol. 9(3), pages 205-222.
    • Handle: RePEc:eee:foreco:v:9:y:2003:i:3:p:205-222
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    More about this item

    Keywords

    cointegration stumpage prices timber stocks;

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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