A concept for the calculation of financial losses when changing the forest management strategy

Möhring, Bernhard; Rüping, U.

doi:10.1016/j.forpol.2007.06.004

Cited by 30 publications

(15 citation statements)

References 3 publications

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“…For theoretical background on net present valuation, see Pearce and Nash (1989), Price (1993), and Samuelson (1976), and for technical notations and methodology of NPV analysis, for example, see (Möhring and Rüping 2008;Pearce and Nash 1989;and Raunikar et al 2000). We selected the NPV method instead of applying, for instance, bare land value and Faustmann rotation model (e.g., Hyytiäinen and Tahvonen 2001) because the decision point of the financial analyses was set to the point when the actual decision on alternative management regimes is being made (i.e., the stage of young stands) and from which the rest of rotation will be examined.…”

Section: Methodsmentioning

confidence: 99%

Profitability of alternative management regimes in Scots pine stands on drained peatlands

Kojola¹,

Ahtikoski²,

Hökkä³

et al. 2011

Eur J Forest Res

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In drained, forested peatlands, ditch network maintenance (DNM) is often considered necessary for tree growth, but it also constitutes additional management costs. Commercial thinnings, in turn, in addition to their silvicultural benefits, are generally applied to enhance the financial performance of stand management but results from peatland stands are scarce. In this study, our aim was to find financially feasible management practices for Scots pine-dominated stands on drained peatland sites in Finland. Using mainly inventory data sets, we compiled altogether 29 typical model-stands for four climatic areas, four site types, and two stand conditions according to need for silvicultural care. We used MOTTI stand simulator to predict the development of the model-stands according to different management regimes consisting of various combinations of 0-2 DNM and 0-2 thinnings with different timings and thinning intensities. We then calculated and compared the financial feasibility of the regimes using net present value (NPV; discount rate 3%) analysis. The separate effect of DNM on the profitability was marginal, but the positive effect of thinnings was clear. The harvesting removals varied within a wide range, depending on the timing and intensity of thinnings, but on average, the NPV doubled due to the thinnings. In the stands of initially good silvicultural condition, regimes including only one thinning and a DNM operation generally displayed a good financial result. In the stands of initially poor silvicultural condition due to neglected early care, regimes with two thinnings produced the best NPV regardless of the often low-yielding first thinning.

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Section: Methodsmentioning

confidence: 99%

Profitability of alternative management regimes in Scots pine stands on drained peatlands

Kojola¹,

Ahtikoski²,

Hökkä³

et al. 2011

Eur J Forest Res

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“…Offering inducements and compensations to farmers for the potential profits they must forego by maintaining wildlife-friendly systems is a possible option to internalize those services that are neglected by the market, and channel them to natural resource managers who generate these services (Pagiola et al 2005;Grieg-Gran et al 2005;Möhring and Rüping 2008;Engel et al 2008;Kemkes et al 2010).…”

Section: State Of the Art: Impacts Of Economic Factors On Land-use Dementioning

confidence: 99%

Avoiding the loss of shade coffee plantations: how to derive conservation payments for risk-averse land-users

et al. 2012

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We usually have only limited knowledge about the economic consequences of land-use decisions, thus they are uncertain. We analyze the implications of this uncertainty on conservation payments (CP) to preserve wildlife-friendly shade coffee production in southwest Ecuador, when conversion to maize is the most profitable alternative. Our objective is twofold: First, we analyze the consequences of applying Stochastic Dominance (SD) to derive CP, an approach making only minimal assumptions about the preferences of farmers. Second, we investigate the effects of land-use diversification to reduce CP by allowing for shade coffee on part of a landholding, and maize production on what remains. CP derived by SD turned out to be at least twice the amount calculated by an alternative method which maximizes a concave utility function-US$ 166 to US$ 294 ha -1 year -1 instead of US$ 86 ha -1 year -1 . Given this result, we doubt that the assumptions underlying SD are reasonable for farmers, who are known to be riskaverse. Allowing for land-use diversification has a significant impact on CP. The optimal portfolio share of shade coffee is 27 % and for maize 73 % for moderately risk-averse farmers-without any CP. A larger share of shade coffee is preferable for strongly risk-averse farmers-51 and 49 % maize. The amount of CP necessary to encourage the expansion of shade coffee to 75 % is US$ 40 ha -1 year -1 (for moderately risk-averse) and US$ 19 ha -1 year -1 (for strongly risk-averse farmers). Stimulating diversification may thus help to significantly reduce CP necessary to preserve less profitable agroforestry options.

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“…Tarp et al (2000), Hanewinkel (2001), , , Jacobsen et al (2004), Price and Price (2006), Jacobsen (2007) and Möhring and Rüping (2008), while the final state have been analysed by Nord-Larsen et al (2003) and Jacobsen and Helles (2006). In this study, we look at the transformation period and only take the final state into account when calculating the total expectation value (EV).…”

Section: Literature Overviewmentioning

confidence: 99%

An economic evaluation of strategies for transforming even-aged into near-natural forestry in a conifer-dominated forest in Denmark

Schou

Jacobsen

Kristensen

2012

Forest Policy and Economics

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A concept for the calculation of financial losses when changing the forest management strategy

Cited by 30 publications

References 3 publications

Profitability of alternative management regimes in Scots pine stands on drained peatlands

Profitability of alternative management regimes in Scots pine stands on drained peatlands

Avoiding the loss of shade coffee plantations: how to derive conservation payments for risk-averse land-users

An economic evaluation of strategies for transforming even-aged into near-natural forestry in a conifer-dominated forest in Denmark

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