980 research outputs found

    Regime switching in stochastic models of commodity prices: An application to an optimal tree harvesting problem

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    This paper investigates a regime switching model of stochastic lumber prices in the context of an optimal tree harvesting problem. Using lumber derivatives prices, two lumber price models are calibrated: a regime switching model and a single regime model. In the regime switching model, the lumber price can be in one of two regimes in which different mean reverting price processes prevail. An optimal tree harvesting problem is specified in terms of a linear complementarity problem which is solved using a fully implicit finite difference, fully-coupled, numerical approach. The land value and critical harvesting prices are found to be significantly different depending on which price model is used. The regime switching model shows promise as a parsimonious model of timber prices that can be incorporated into forestry investment problems.optimal tree harvesting, regime switching, calibration, lumber derivatives prices, fully implicit finite difference approach

    MEASURING FOREST RESOURCE VALUES: AN ASSESSMENT OF CHOICE EXPERIMENTS AND PREFERENCE CONSTRUCTION METHODS AS PUBLIC INVOLVEMENT TOOLS

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    Human values arising from forests include market and non-market values. Timber values and values of non-timber forest products traded in markets (berries, wild rice, etc.) are considered market values. Among non-market values are recreation values and values associated with wildlife harvesting by Aboriginal People. These are considered non-market because participation in these activities does not require the purchase of market based permits; prices do not function as rationing devices in these activities. In addition to non-market values arising from activities, individuals may also have values associated with forest conditions (biodiversity, etc.). These are referred to as passive use values since the value is not associated with any specific use of the resource or activity related to the forest. Since forests in Canada are largely on public land, these passive use values are particularly relevant to Canadian forest management. These values reveal the preferences of the public for components of forest management. Eliciting these values is a form of public involvement in that the public is engaged in assessing forest management options and providing opinions and sentiments regarding these options. Ideally, values arising from forests would be collected from a broad range of the public and examined to provide guidance to forest managers. However, values over forest outputs and conditions may be very poorly formed when people have little experience with the range and complexity of forest ecology and management. In addition, eliciting values without framing them in a trade-off setting can result in misleading estimates. In this project we attempt to elicit passive use values in a manner that allows for poorly defined initial notions of value through an approach known as preference construction. Preference construction essentially provides for education and information processing in the development of passive use values. These estimates are also developed using a trade-off approach (choice experiments). The project focuses on the values of the local public within the NorSask forest. More formally, the objectives of this research are to: 1) ascertain the passive use values held by local people associated with forests in the NorSask Forest Management License Area; 2) explore differences in preferences based on the degree and frequency of formal preference construction exercises; and 3) evaluate this approach as a method of public involvement. A total of 43 individuals from the local community were involved in the valuation exercise. They participated in 3 groups or treatments, each with a different level of involvement in the valuation assessment. The first group was involved in three separate sessions, allowing for significant preference construction and information acquisition. The second group was involved in only one session and the third group was involved only minimally through a telephone contact and the completion of a survey delivered through the mail. The hypothesis being examined was that the degree of involvement in the exercise would affect the responses either in terms of the variances of the responses or the actual preferences. Not all forest values can be examined in a single valuation task. In this case values associated with key game species (moose), wildlife species reflecting biodiversity or threatened species (caribou), old age classes of forest, protected areas and local employment were assessed. These were selected based on the preference construction sessions with the first group. A general trend was found in the ranking of forest values. The values were highest for increases in older forest age classes and protected areas and lower for caribou and moose levels (expressed in percentage changes relative to current levels). The lowest value arose from the local jobs generated by forestry activity. Monetary measures of these values were also developed. The scenario choices made by the individuals revealed that a 5% increase in moose and caribou populations would be worth approximately 10and10 and 12 per year. A 5% increases in old age classes or protected areas was worth approximately 4 to 5 times as much. They were willing to pay approximately $7 per year in increased taxes for increases in local employment. The hypothesis that the group preferences would differ was not accepted. The preferences of the first and third groups, while expected to be very different, were in fact quite similar. The second group did appear to be different from these other two but it is possible that significant variation in demographic characteristics was driving that difference, rather than the level of preference construction effort. The sample in the third group did however exhibit more resistance to completing the exercise and registered more protests to the value assessment. In conclusion, the approach employed was successful in eliciting passive use values for components of forest management. These values alone provide interesting information for managers to consider in the development of management plans. Evidence supporting the hypothesis that preference construction approaches improve these valuation exercises was not found in this study although this result must be tempered by the limitations arising from sample size and demographic composition of the study groups.Resource /Energy Economics and Policy,

    Optimal Soil Management and Environmental Policy

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    This paper studies the effects of environmental policy on the farmer’s soil optimal management. We consider a dynamic economic model of soil erosion where the intensity use of inputs allows the farmer to control soil losses. Therefore, inputs use induces a pollution which is accentuated by the soil fragility. We show, at the steady state, that the environmental tax induces a more conservative farmer behavior for soil, but in some cases it can exacerbate pollution. These effects can be moderated when farmers introduce abatement activity.Soil erosion, Pollution, Environmental policy, Optimal soil conservation, Abatement activities

    Wealth Accumulation and Activity Choice Evolution Among Amazonian Forest Peasant Households

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    This paper examines investment and livelihood decisions among forest peasant households in the Amazonian floodplain. A dynamic household model of multiple asset accumulation and activity choice under risk and credit constraints is developed by incorporating natural resource use and human capital evolution. Asset portfolios and sectoral incomes are estimated and then simulated to investigate the endowment and lifecycle dependency as well as the convergence/divergence of asset accumulation and corresponding activity choices. Physical asset endowment (especially land) and different human capital evolutions across activities help to explain forest peasants' livelihood choices, distinctive asset portfolios, and divergent income outcomes over the lifecycle.

    Optimal Control and Spatial Heterogeneity: Pattern Formation in Economic-Ecological Models

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    This paper extends Turing analysis to standard recursive optimal control frameworks in economics and applies it to dynamic bioeconomic problems where the interaction of coupled economic and ecological dynamics under optimal control over space creates (or destroys) spatial heterogeneity. We show how our approach reduces the analysis to a tractable extension of linearization methods applied to the spatial analog of the well known costate/state dynamics. We explicitly show the existence of a non-empty Turing space of diffusive instability by developing a linear-quadratic approximation of the original non-linear problem. We apply our method to a bioeconomic problem, but the method has more general economic applications where spatial considerations and pattern formation are important. We believe that the extension of Turing analysis and the theory associated with the dispersion relationship to recursive infinite horizon optimal control settings is new.Spatial analysis, Pattern formation, Turing mechanism, Turing space, Pontryagin’s principle, Bioeconomics

    Renewable Natural Resources and Endogenous Growth

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    We study a two-sector endogenous growth model where a single consumption good is obtained using a renewable resource in combination with physical capital. Both inputs are essential for production and technical substitutes. In this context we analyze the issues of sustainability, long-run and short-run growth as well as convergence, associated with the competitive equilibrium solution trajectories. We show that efficiency, long-run growth and sustainability are both compatible in a natural resource based production economy.Natural Capital, Endogenous Growth, Sustainability, Convergence

    Modeling Uncertainty in Large Natural Resource Allocation Problems

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    The productivity of the world's natural resources is critically dependent on a variety of highly uncertain factors, which obscure individual investors and governments that seek to make long-term, sometimes irreversible investments in their exploration and utilization. These dynamic considerations are poorly represented in disaggregated resource models, as incorporating uncertainty into large-dimensional problems presents a challenging computational task. This study introduces a novel numerical method to solve large-scale dynamic stochastic natural resource allocation problems that cannot be addressed by conventional methods. The method is illustrated with an application focusing on the allocation of global land resource use under stochastic crop yields due to adverse climate impacts and limits on further technological progress. For the same model parameters, the range of land conversion is considerably smaller for the dynamic stochastic model as compared to deterministic scenario analysis. The scenario analysis can thus significantly overstate the magnitude of expected land conversion under uncertain crop yields

    A seasonal, density-dependent model for the management of an invasive weed

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    Author Posting. © Ecological Society of America, 2013. This article is posted here by permission of Ecological Society of America for personal use, not for redistribution. The definitive version was published in Ecological Applications 23 (2013): 1893-1905, doi:10.1890/12-1712.1.The population effects of harvest depend on complex interactions between density dependence, seasonality, stage structure, and management timing. Here we present a periodic nonlinear matrix population model that incorporates seasonal density dependence with stage-selective and seasonally selective harvest. To this model, we apply newly developed perturbation analyses to determine how population densities respond to changes in harvest and demographic parameters. We use the model to examine the effects of popular control strategies and demographic perturbations on the invasive weed garlic mustard (Alliaria petiolata). We find that seasonality is a major factor in harvest outcomes, because population dynamics may depend significantly on both the season of management and the season of observation. Strategies that reduce densities in one season can drive increases in another, with strategies giving positive sensitivities of density in the target seasons leading to compensatory effects that invasive species managers should avoid. Conversely, demographic parameters to which density is very elastic (e.g., seeding survival, second-year rosette spring survival, and the flowering to fruiting adult transition for maximum summer densities) may indicate promising management targets.This work was supported by the National Science Foundation (grant DEB-0816514), the National Research Initiative of the USDA Cooperative State Research, Education and Extension Service (grant 05-2290), the Alexander von Humboldt Foundation, and the Academic Programs Office at WHOI

    Emergence and Implications of Conservation Opinion Propagation in Dynamic Coupled Socio-Ecological Systems

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    Human behaviour is rarely a static phenomenon. In life, individuals are presented with choices that define the trajectories they will experience days, weeks or months later. As an example consider farmer decision-making and orchard dynamics. If an avocado orchard is well taken care of, a bountiful harvest can lead to a lower price of avocados that will more easily attract grocers to stock the product. Alternatively, if the orchard is not properly cared for, avocado prices can surge (due to their low supply) and become a greater risk for grocers, causing them to seek other suppliers. If a particular 'care' routine is developed by the farmer, this can have a significant impact on the long-term trajectories of orchard dynamics. From this simple example, it is clear how dynamic human behaviour can interact with environmental system dynamics. This motivates the potential value of capturing this interaction in mathematical modelling. In this thesis, we develop two different coupled human-environment system (CHES) models that incorporate a dynamic feedback loop mechanism to link human impact and environmental system responses and vice versa. The first model is developed using a game-theoretic approach to describe dynamics of opinion spread. The model is then coupled to a previously established coral reef ecosystem model. We investigate the effects of key factors such as social learning, social norms, and exploitation rate on the trajectories predicted by the model. We discover stable regimes that are made possible by the presence of human coupling and we identify the potentially harmful role of social norms. In the second model, we utilize a similar game-theoretic approach to couple a dynamic human component to a previously established grassland model of the Southeastern Australian grasslands. The aim of this model is to determine conditions that suppress invasive exotic grasses, in the presence of human feedback that determines how strongly the local population mitigates its own pollution. Finally, we conduct a systematic review of the CHES modelling literature between May 2009 and April 2019 using the Web of Knowledge and PUBMED databases. Results reveal an increasing trend in the number of mathematical models using a CHES approach. Results also show that these models utilize a wide range of techniques of varying complexity. In general, most work focuses on agricultural systems. We postulate that application to other environmental systems is relatively unexplored and can be implemented using techniques similar to those of the models developed in this thesis, or via adaptations of other modelling techniques from different fields of research. We suggest that including dynamic human behaviour is necessary in order to improve existing environmental policies and improve the predictive power of mathematical modelling techniques in environmental systems research
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