IDEAS home Printed from https://ideas.repec.org/a/uwp/landec/v86y2010i1p155-172.html
   My bibliography  Save this article

Optimal Forest Management with Carbon Sequestration Credits and Endogenous Fire Risk

Author

Listed:
  • Adam J. Daigneault
  • Mario J. Miranda
  • Brent Sohngen

Abstract

We use a stochastic dynamic profit maximization model to investigate the effects of forest carbon sequestration credits on optimal forest management practices for stands facing wildfire risk. Landowners that periodically thin a stand can increase growth rates and mitigate loss of timber and carbon stocks from wildfire. Results indicate that thinning and shortening rotations are cost-effective strategies to mitigate wildfire risk. Carbon prices cause landowners to delay both their thinning treatments and the final rotation age. Thinning and extending timber rotations are thus a viable climate-change mitigation option even when stands are susceptible to risks of fire.

Suggested Citation

  • Adam J. Daigneault & Mario J. Miranda & Brent Sohngen, 2010. "Optimal Forest Management with Carbon Sequestration Credits and Endogenous Fire Risk," Land Economics, University of Wisconsin Press, vol. 86(1), pages 155-172.
    • Handle: RePEc:uwp:landec:v:86:y:2010:i:1:p:155-172
    as

    Download full text from publisher

    File URL: http://le.uwpress.org/cgi/reprint/86/1/155
    Download Restriction: A subscripton is required to access pdf files. Pay per article is available.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kenneth L. Judd, 1998. "Numerical Methods in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262100711, April.
    2. Chladna, Zuzana, 2007. "Determination of optimal rotation period under stochastic wood and carbon prices," Forest Policy and Economics, Elsevier, vol. 9(8), pages 1031-1045, May.
    3. Robert N. Stavins, 1999. "The Costs of Carbon Sequestration: A Revealed-Preference Approach," American Economic Review, American Economic Association, vol. 89(4), pages 994-1009, September.
    4. G. Cornelis van Kooten & Clark S. Binkley & Gregg Delcourt, 1995. "Effect of Carbon Taxes and Subsidies on Optimal Forest Rotation Age and Supply of Carbon Services," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 365-374.
    5. Gregory S. Amacher & Arun S. Malik & Robert G. Haight, 2005. "Not Getting Burned: The Importance of Fire Prevention in Forest Management," Land Economics, University of Wisconsin Press, vol. 81(2).
    6. McArdle, Richard E. & Meyer, Walter H. & Bruce, Donald, 1949. "The Yield of Douglas Fir in the Pacific Northwest," Technical Bulletins 162739, United States Department of Agriculture, Economic Research Service.
    7. Jonathan Yoder, 2004. "Playing with Fire: Endogenous Risk in Resource Management," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 933-948.
    8. Englin, Jeffrey E. & Boxall, Peter C. & Hauer, Grant, 2000. "An Empirical Examination Of Optimal Rotations In A Multiple-Use Forest In The Presence Of Fire Risk," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(1), pages 1-14, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Charles Sims & David Aadland & David Finnoff & James Powell, 2013. "How Ecosystem Service Provision Can Increase Forest Mortality from Insect Outbreaks," Land Economics, University of Wisconsin Press, vol. 89(1), pages 154-176.
    2. Susaeta, Andres & Chang, Sun Joseph & Carter, Douglas R. & Lal, Pankaj, 2014. "Economics of carbon sequestration under fluctuating economic environment, forest management and technological changes: An application to forest stands in the southern United States," Journal of Forest Economics, Elsevier, vol. 20(1), pages 47-64.
    3. Acosta, Montserrat & Sohngen, Brent, 2009. "How big is leakage from forestry carbon credits? Estimates from a Global Model," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49468, Agricultural and Applied Economics Association.
    4. Jussi Lintunen & Jussi Uusivuori, 2014. "On The Economics of Forest Carbon: Renewable and Carbon Neutral But Not Emission Free," Working Papers 2014.13, Fondazione Eni Enrico Mattei.
    5. Kim, Taeyoung & Langpap, Christian, 2012. "Private Landowners’ Response to Incentives for Carbon Sequestration in Forest Management," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 130709, Agricultural and Applied Economics Association.
    6. Tommi Ekholm, 2019. "Optimal forest rotation under carbon pricing and forest damage risk," Papers 1912.00269, arXiv.org.
    7. Hoel, Michael & Holtsmark, Bjart & Holtsmark, Katinka, 2014. "Faustmann and the climate," Journal of Forest Economics, Elsevier, vol. 20(2), pages 192-210.
    8. Al Abri, Ibtisam H. & Grogan, Kelly A. & Daigneault, Adam, 2017. "Optimal Forest Fire Management with Applications to Florida," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258568, Agricultural and Applied Economics Association.
    9. Ekholm, Tommi, 2020. "Optimal forest rotation under carbon pricing and forest damage risk," Forest Policy and Economics, Elsevier, vol. 115(C).
    10. Patto, João V. & Rosa, Renato, 2022. "Adapting to frequent fires: Optimal forest management revisited," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    11. Luis Diaz-Balteiro & David Martell & Carlos Romero & Andrés Weintraub, 2014. "The optimal rotation of a flammable forest stand when both carbon sequestration and timber are valued: a multi-criteria approach," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 72(2), pages 375-387, June.
    12. Aino Assmuth & Janne Rämö & Olli Tahvonen, 2021. "Optimal Carbon Storage in Mixed-Species Size-Structured Forests," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(2), pages 249-275, June.
    13. Sohngen, Brent & Tian, Xiaohui, 2016. "Global climate change impacts on forests and markets," Forest Policy and Economics, Elsevier, vol. 72(C), pages 18-26.
    14. Köthke, Margret & Dieter, Matthias, 2010. "Effects of carbon sequestration rewards on forest management--An empirical application of adjusted Faustmann Formulae," Forest Policy and Economics, Elsevier, vol. 12(8), pages 589-597, October.
    15. Gren, Ing-Marie & Zeleke, Abenezer Aklilu, 2016. "Policy design for forest carbon sequestration: A review of the literature," Forest Policy and Economics, Elsevier, vol. 70(C), pages 128-136.
    16. Kuusela, Olli-Pekka & Lintunen, Jussi, 2020. "Modeling market-level effects of disturbance risks in age structured forests," Forest Policy and Economics, Elsevier, vol. 118(C).
    17. Gintautas Mozgeris & Vaiva Kazanavičiūtė & Daiva Juknelienė, 2021. "Does Aiming for Long-Term Non-Decreasing Flow of Timber Secure Carbon Accumulation: A Lithuanian Forestry Case," Sustainability, MDPI, vol. 13(5), pages 1-24, March.
    18. Creamer, Selmin F. & Genz, Alan & Blatner, Keith A., 2012. "The Effect of Fire Risk on the Critical Harvesting Times for Pacific Northwest Douglas-Fir When Carbon Price Is Stochastic," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 41(3), pages 1-14, December.
    19. Labbé, Rodrigo & Niklitschek, Mario & Contreras, Marco, 2023. "Effect of climate change on the land rent of radiata pine plantations in Chile: Site productivity and forest fires," Forest Policy and Economics, Elsevier, vol. 156(C).
    20. Lauer, Christopher J. & Montgomery, Claire A. & Dietterich, Thomas G., 2017. "Spatial interactions and optimal forest management on a fire-threatened landscape," Forest Policy and Economics, Elsevier, vol. 83(C), pages 107-120.
    21. Luo, Li & Gao, Yuan & Regan, Courtney M. & Summers, David M. & Connor, Jeffery D. & O'Hehir, Jim & Meng, Li & Chow, Christopher W.K., 2024. "Emissions offset incentives, carbon storage and profit optimization for Australian timber plantations," Forest Policy and Economics, Elsevier, vol. 159(C).
    22. Couture, Stéphane & Reynaud, Arnaud, 2011. "Forest management under fire risk when forest carbon sequestration has value," Ecological Economics, Elsevier, vol. 70(11), pages 2002-2011, September.
    23. Rossi, David & Kuusela, Olli-Pekka, 2023. "Carbon and Timber Management in Western Oregon under Tax-Financed Investments in Wildfire Risk Mitigation," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 48(2), May.
    24. Zhou, Mo, 2015. "Adapting sustainable forest management to climate policy uncertainty: A conceptual framework," Forest Policy and Economics, Elsevier, vol. 59(C), pages 66-74.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Couture, Stéphane & Reynaud, Arnaud, 2011. "Forest management under fire risk when forest carbon sequestration has value," Ecological Economics, Elsevier, vol. 70(11), pages 2002-2011, September.
    2. Ning, Zhuo & Sun, Changyou, 2017. "Forest management with wildfire risk, prescribed burning and diverse carbon policies," Forest Policy and Economics, Elsevier, vol. 75(C), pages 95-102.
    3. Luis Diaz-Balteiro & David Martell & Carlos Romero & Andrés Weintraub, 2014. "The optimal rotation of a flammable forest stand when both carbon sequestration and timber are valued: a multi-criteria approach," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 72(2), pages 375-387, June.
    4. Tommi Ekholm, 2019. "Optimal forest rotation under carbon pricing and forest damage risk," Papers 1912.00269, arXiv.org.
    5. Macpherson, Morag F. & Kleczkowski, Adam & Healey, John R. & Hanley, Nick, 2017. "Payment for multiple forest benefits alters the effect of tree disease on optimal forest rotation length," Ecological Economics, Elsevier, vol. 134(C), pages 82-94.
    6. Patto, João V. & Rosa, Renato, 2022. "Adapting to frequent fires: Optimal forest management revisited," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    7. Insley, Margaret & Lei, Manle, 2007. "Hedges and Trees: Incorporating Fire Risk into Optimal Decisions in Forestry Using a No-Arbitrage Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 32(3), pages 1-23, December.
    8. Robert N. Stavins, 1998. "A Methodological Investigation of the Costs of Carbon Sequestration," Journal of Applied Economics, Taylor & Francis Journals, vol. 1(2), pages 231-277, November.
    9. Rong Li & Brent Sohngen & Xiaohui Tian, 2022. "Efficiency of forest carbon policies at intensive and extensive margins," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(4), pages 1243-1267, August.
    10. Tee, James & Scarpa, Riccardo & Marsh, Dan & Guthrie, Graeme, 2012. "Valuation of Carbon Forestry and the New Zealand Emissions Trading Scheme: A Real Options Approach Using the Binomial Tree Method," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 123665, International Association of Agricultural Economists.
    11. Masashi Konoshima & Claire A. Montgomery & Heidi J. Albers & Jeffrey L. Arthur, 2008. "Spatial-Endogenous Fire Risk and Efficient Fuel Management and Timber Harvest," Land Economics, University of Wisconsin Press, vol. 84(3), pages 449-468.
    12. Al Abri, Ibtisam H. & Grogan, Kelly A. & Daigneault, Adam, 2017. "Optimal Forest Fire Management with Applications to Florida," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258568, Agricultural and Applied Economics Association.
    13. Shaikh, Sabina L. & Sun, Lili & van Kooten, G. Cornelis, 2005. "Are Agricultural Values a Reliable Guide in Determining Landowners’ Decisions to Create Carbon Forest Sinks?," Working Papers 37017, University of Victoria, Resource Economics and Policy.
    14. Newman, D.H., 2002. "Forestry's golden rule and the development of the optimal forest rotation literature," Journal of Forest Economics, Elsevier, vol. 8(1), pages 5-27.
    15. Xu, Ying & Amacher, Gregory S. & Sullivan, Jay, 2016. "Optimal forest management with sequential disturbances," Journal of Forest Economics, Elsevier, vol. 24(C), pages 106-122.
    16. Asante, Patrick & Armstrong, Glen W. & Adamowicz, Wiktor L., 2011. "Carbon sequestration and the optimal forest harvest decision: A dynamic programming approach considering biomass and dead organic matter," Journal of Forest Economics, Elsevier, vol. 17(1), pages 3-17, January.
    17. Favero, Alice & Mendelsohn, Robert & Sohngen, Brent, 2016. "Carbon Storage and Bioenergy: Using Forests for Climate Mitigation," MITP: Mitigation, Innovation and Transformation Pathways 232215, Fondazione Eni Enrico Mattei (FEEM).
    18. Ovando, Paola & Caparrós, Alejandro, 2009. "Land use and carbon mitigation in Europe: A survey of the potentials of different alternatives," Energy Policy, Elsevier, vol. 37(3), pages 992-1003, March.
    19. Sedjo, Roger, 1999. "Potential for Carbon Forest Plantation in Marginal Timber Forests: The Case of Patagonia, Argentina," RFF Working Paper Series dp-99-27, Resources for the Future.
    20. Nghiem Thi Hong Nhung, 2016. "Optimal Forest Management for Carbon Sequestration: A Case Study of Eucalyptus urophylla and Acacia mangium in Yen Bai Province, Vietnam," EEPSEA Research Report rr2016046, Economy and Environment Program for Southeast Asia (EEPSEA), revised Apr 2016.

    More about this item

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uwp:landec:v:86:y:2010:i:1:p:155-172. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: http://le.uwpress.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.