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Prospect Theory and Tenure Reform: Impacts on Forest Management

Author

Listed:
  • Karen A. Sullivan
  • Emi Uchida
  • Thomas W. Sproul
  • Jintao Xu

Abstract

We examine the role of risk and time preferences in how forest owners respond to forest certification. We test hypotheses from a two-period harvest model derived from prospect theory in the context of Fujian, China, where new forest certification started in 2003. Using survey and field experiment data, we find that certification resulted in reduced harvesting, and the effect was larger for households who are more risk averse and exhibited distorted probability weighting. In contrast, loss averse households increased harvesting after certification. These findings suggest that diverse individual preferences may be a source of impact heterogeneity for forest certification.

Suggested Citation

  • Karen A. Sullivan & Emi Uchida & Thomas W. Sproul & Jintao Xu, 2018. "Prospect Theory and Tenure Reform: Impacts on Forest Management," Land Economics, University of Wisconsin Press, vol. 94(3), pages 405-424.
    • Handle: RePEc:uwp:landec:v:94:y:2018:i:3:p:405-424
    Note: DOI: 10.3368/le.94.3.405
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    Citations

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    Cited by:

    1. Hong, Yan-Zhen & Su, Yi-Ju & Chang, Hung-Hao, 2023. "Analyzing the relationship between income and life satisfaction of Forest farm households - a behavioral economics approach," Forest Policy and Economics, Elsevier, vol. 148(C).
    2. Lin Liu & Honggang Sun, 2019. "The Impact of Collective Forestland Tenure Reform on the Forest Economic Efficiency of Farmers in Zhejiang Province," Sustainability, MDPI, vol. 11(8), pages 1-15, April.
    3. Kuluppuarachchi, Mahesha K. & Sun, Changyou & Gordon, Jason S. & Grebner, Donald L. & Munn, Ian A. & Yang, Jia, 2021. "The length and determinants of forestland ownerships in Mississippi from 1999 to 2019," Forest Policy and Economics, Elsevier, vol. 129(C).
    4. Duan, Wei & Shen, Jinyu & Hogarth, Nicholas J. & Chen, Qian, 2021. "Risk preferences significantly affect household investment in timber forestry: Empirical evidence from Fujian, China," Forest Policy and Economics, Elsevier, vol. 125(C).

    More about this item

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • 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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