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Economic analysis of postwindthrow forest management: the cut-or-keep decision rule

Author

Listed:
  • Claudio Petucco

    (UMR INRA – AgroParisTech, Laboratoire d’Economie Forestière, 54042 Nancy Cedex, France)

  • Pablo Andrés-Domenech

    (UMR INRA – AgroParisTech, Laboratoire d’Economie Forestière, 54042 Nancy Cedex, France)

  • Lilian Duband

    (UMR INRA – AgroParisTech, Laboratoire d’Economie Forestière, 54042 Nancy Cedex, France)

Abstract

Wind storms are one of the most important risks for forest management. After a storm hits a forest stand the forest owner has two possibilities: clear cut and start a new rotation or keep the standing trees until maturity. We compute the Land Expectation Value (LEV) under the risk of windthrow and introduce an endogenous rule to account for this decision. We compare the result with the alternative - often used in the literature- of clear cut and replant by default after each storm. We calibrated our model to represent maritime pine plantations in south-western France. Our results show that roughly 75% of the time it is profitable to keep the standing trees until maturity. So doing the forest owner may increase payoffs by up to 90% when the economic risk (i.e. probability of having a storm) is high. Although payoffs are sensitive to economic risk, the optimal rotation age does not change much with significant increases in the risk probability.

Suggested Citation

  • Claudio Petucco & Pablo Andrés-Domenech & Lilian Duband, 2017. "Economic analysis of postwindthrow forest management: the cut-or-keep decision rule," Working Papers - Cahiers du LEF 2017-06, Laboratoire d'Economie Forestiere, AgroParisTech-INRA, revised Jun 2017.
    • Handle: RePEc:lef:wpaper:2017-06
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    File URL: http://www6.nancy.inra.fr/lef/Cahiers-du-LEF/2017/2017-06
    File Function: First version, 2010
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    Cited by:

    1. Petucco, Claudio & Andrés-Domenech, Pablo, 2018. "Land expectation value and optimal rotation age of maritime pine plantations under multiple risks," Journal of Forest Economics, Elsevier, vol. 30(C), pages 58-70.

    More about this item

    Keywords

    Faustmann; land expectation value; optimal rotation age; risk; windthrow; wind storm; forestry; pine; plantation; Landes;
    All these keywords.

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • 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

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