The value of adaption: Climate change and timberland management

Guo, Christopher; Costello, Christopher

doi:10.1016/j.jeem.2012.12.003

Cited by 46 publications

(28 citation statements)

References 44 publications

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“…People prepare for the distribution of weather risks they believe they face, but if their beliefs are wrong, then they will over-or under-prepare for different weather events, both of which are costly relative to a situation with full information. If adaptation is discontinuous, then costs associated with imperfect adjustment are theoretically unbounded and could be substantial (Guo and Costello, 2013). However, if the difference between beliefs is small enough and the set of adaptation options discrete, then imperfect learning may result in no difference in decisions and therefore no welfare losses (Klumpp, 2006).…”

Section: Discussionmentioning

confidence: 99%

“…Whether or not these relatively small values result in economically meaningful adjustment costs depends on the specific set of adaptation strategies available to firms. Guo and Costello (2013) show that if adaptation technologies are discontinuous, then the value of adaptation is theoretically unbounded. This means that even small discrepancies between beliefs and the true climate could, in some circumstances, result in large adjustment costs.…”

Section: -13mentioning

confidence: 98%

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Learning, Adaptation, and Weather in a Changing Climate

Moore

2017

Clim. Change Econ.

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Climate change will push the weather experienced by people affected outside the bounds of historic norms, resulting in unprecedented weather events. But people and firms should be able to learn from their experience of unusual weather and adjust their expectations about the climate distribution accordingly. The efficiency of this learning process gives an upper bound on the rate at which adaptation can occur and is therefore important in determining the adjustment costs associated with climate change. Learning about climate change requires people to infer the state of a changing probability distribution (climate) given annual draws from that distribution (weather). If the climate is stationary, it can be inferred from the distribution of historic weather observations, but if it is changing, the inference problem is more challenging. This paper first develops different learning models, including an efficient hierarchical Bayesian model in which the observer learns whether the climate is changing and, if it is, the functional form that describes that change. I contrast this with a less efficient but simpler learning model in which observers react to past changes but are unable to anticipate future changes. I propose a general metric of learning costs based on the average, discounted squared difference between beliefs and the true climate state and use climate model output to calculate this metric for two emissions scenarios, finding substantial relative differences between learning models and scenarios but small absolute values. Geographic differences arise from spatial patterns of warming rates and natural weather variability (noise). Finally, I present results from an experimental game simulating the adaptation decision, which suggests that people are able to learn about a trending climate and respond proactively.

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Section: Discussionmentioning

confidence: 99%

Section: -13mentioning

confidence: 98%

Learning, Adaptation, and Weather in a Changing Climate

Moore

2017

Clim. Change Econ.

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“…On the other hand, climate change could also reduce the viability of agriculture in some areas, potentially diminishing certain pressures. Furthermore, the environmental impacts of adaptation are not limited to farming, but concern most activities which will be impacted by climate change, including energy demand and production 22 , fisheries 23 , forestry 24 and health 25 . This of course does not imply that adaptation is inappropriate, rather it demonstrates that policies should take into account the wider implications of adaptation and seek to incorporate such synergies and trade-offs.…”

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confidence: 99%

The environmental impact of climate change adaptation on land use and water quality

Fezzi

Harwood

Lovett

et al. 2017

Building a Climate Resilient Economy and Society

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“…We follow the line of research of Guo and Costello (2013), who report the value of adapting forest management prescriptions to be only minor. We confirm their result with a similar framework as used in their study, where thinnings are not allowed.…”

Section: Discussionmentioning

confidence: 99%

“…by Hanewinkel et al (2010;. Furthermore, the study by Guo and Costello (2013) compare this "adaptation of forestry on the extensive margin" to "the adaptation on the intensive margin", the latter denoting the adaptation of forest management while maintaining species selection fixed. They report the importance of the latter being minor.…”

Section: Economics Of Forest Management Adaptation To Climate Changementioning

confidence: 99%

On the economics of boreal Scots pine management under climate change

Pihlainen¹

2017

Diss. For.

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To be presented, with the permission of the Faculty of Agriculture and Forestry of the University of Helsinki, for public criticism in room K110, C-building, Latokartanonkaari 5, Helsinki on 15 th December 2017, at 12 o'clock noon. This dissertation aims to develop the economics of even-aged Scots pine (Pinus sylvestris L.) management. In our economic-ecological model, a detailed process-based forest growth model is connected to an economic description of stand management. The process-based growth model is able to describe forest growth in management regimes and climate conditions previously not experienced, because it applies causal relationships and feedbacks instead of statistical correlations. Optimization is carried out with an effective general pattern search algorithm. The optimized variables include rotation length, initial stand density, and the timing, type, intensity, and number of thinnings. Essential model details include the quality pricing of timber and detailed harvesting cost functions. Integration of carbon subsidy systems into the model enables the determination of the economically optimal carbon storage with various carbon price levels. Finally, the growth model is extended to include a direct link between climate change and tree growth, to optimize stand management in a changing climate.The dissertation thesis is composed of a summary section and three articles, which produce a coherent and comprehensive picture on the optimal stand management of Scots pine in the relevant growth conditions of Fennoscandia. The results demonstrate the necessity to simultaneously optimize all stand management variables, and the advantages of having a detailed model. Optimal stand management is shown to be sensitive to growth conditions, interest rate, and management objective, along with the design of the carbon subsidy system and the subsidy level. The stand-level analysis is additionally extended to the national level, and adapting forest management was found to potentially be a cost-efficient method for carbon abatement in Finland. Furthermore, the optimal adaptation of stand management in a changing climate remarkably improves the economic surplus from forestry.

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The value of adaption: Climate change and timberland management

Cited by 46 publications

References 44 publications

Learning, Adaptation, and Weather in a Changing Climate

Learning, Adaptation, and Weather in a Changing Climate

The environmental impact of climate change adaptation on land use and water quality

On the economics of boreal Scots pine management under climate change

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