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Biotechnical portfolio management of mixed-species forests

Author

Listed:
  • Marielle Brunette

    (LEF, AgroParisTech, INRA)

  • Arnaud Dragicevic

    (LEF, AgroParisTech, INRA
    Istanbul Technical University [ITU, Department of Economics])

  • Jonathan Lenglet

    (LEF, AgroParisTech, INRA)

  • Alexandra Niedzwiedz

    (LEF, AgroParisTech, INRA)

  • Vincent Badeau

    (EEF, Lorraine University, INRA)

  • Jean-Luc Dupouey

    (EEF, Lorraine University, INRA)

Abstract

Based upon the historical data—obtained from the French National Forest Inventory—on the tree species’ productivities, assimilated to be a measure of return on investment, as well as on their variances as sources of risk, we apply the portfolio selection theory in order to optimize the species distributions in France. We thus determine the optimal return-risk combinations of tree species and map them per administrative department. We also estimate the resistance of optimal portfolios using the species’ probabilities of presence. Our results show that greater weights in the optimal portfolios match with higher probabilities of presence, implying that foresters have incentives to invest in the most resilient species.

Suggested Citation

  • Marielle Brunette & Arnaud Dragicevic & Jonathan Lenglet & Alexandra Niedzwiedz & Vincent Badeau & Jean-Luc Dupouey, 2017. "Biotechnical portfolio management of mixed-species forests," Journal of Bioeconomics, Springer, vol. 19(2), pages 223-245, July.
    • Handle: RePEc:kap:jbioec:v:19:y:2017:i:2:d:10.1007_s10818-017-9247-x
    DOI: 10.1007/s10818-017-9247-x
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    References listed on IDEAS

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    1. Marc Hanewinkel & Dominik A. Cullmann & Mart-Jan Schelhaas & Gert-Jan Nabuurs & Niklaus E. Zimmermann, 2013. "Climate change may cause severe loss in the economic value of European forest land," Nature Climate Change, Nature, vol. 3(3), pages 203-207, March.
    2. Knoke, Thomas, 2008. "Mixed forests and finance -- Methodological approaches," Ecological Economics, Elsevier, vol. 65(3), pages 590-601, April.
    3. Clasen, Christian & Griess, Verena C. & Knoke, Thomas, 2011. "Financial consequences of losing admixed tree species: A new approach to value increased financial risks by ungulate browsing," Forest Policy and Economics, Elsevier, vol. 13(6), pages 503-511, July.
    4. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    5. Schou, Erik & Jacobsen, Jette Bredahl & Kristensen, Kristian Løkke, 2012. "An economic evaluation of strategies for transforming even-aged into near-natural forestry in a conifer-dominated forest in Denmark," Forest Policy and Economics, Elsevier, vol. 20(C), pages 89-98.
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    Cited by:

    1. Dragicevic, Arnaud Z., 2019. "Rethinking the forestry in the Aquitaine massif through portfolio management," Forest Policy and Economics, Elsevier, vol. 109(C).
    2. Friedrich, Stefan & Paul, Carola & Brandl, Susanne & Biber, Peter & Messerer, Katharina & Knoke, Thomas, 2019. "Economic impact of growth effects in mixed stands of Norway spruce and European beech – A simulation based study," Forest Policy and Economics, Elsevier, vol. 104(C), pages 65-80.

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    More about this item

    Keywords

    Bioeconomics; Forest management; Portfolio management; Mixed-species forests; Climate change;
    All these keywords.

    JEL classification:

    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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