72 research outputs found
Experimentation with accumulation
We study signal-dependent experimentation in the presence of accumulation
and show that the passive-learner’s action surprisingly coincides with
the experimentor’s when the unknown term is the one determining the decay
rate of the stock, while they differ when the parameter being learned is
the one measuring the accumulation rate. These results highlight the importance
of the dynamic structure of the problem in signal-dependent experimentation.
Moreover, they have important consequences for the pollution-accumulation
debate currently in progress
Technology Adoption in Nonrenewable Resource Management
Nonrenewable resource scarcity has been a traditional concern when designing optimal growth models. Technological change has played an important role in those models, since its presence is assumed to mitigate the depletion effect on extraction paths over time. We formalize the general problem of a competitive nonrenewable resource extracting firm to analyze optimal extraction behavior and technology adoption when adoption is costly, both in a deterministic and a stochastic environment, when the firm either anticipates adoption or not. Based on a quadratic extraction cost function, our results do not support the traditional view according to which the firm will only incur in an adoption cost when the stock is depleted enough.nonrenewable resources; technology adoption; depletion effect; cost of adoption.
Forest management in an urbanizing landscape
This paper aims at building a theoretical framework to examine the impact of development pressure on private owner’s forest management practices, namely, on regeneration and conversion cut dates. As the rent for developed land is rising over time, our model creates the possibility of switching from forestry to residential use at some point in the future, thus departing from the Faustmann’s traditional setup. Comparative statics results with respect to stumpage prices, regeneration costs and urban growth parameters are provided. The results obtained depend on the impact on the opportunity cost of holding the stand and the impact on the opportunity cost of holding the land, generalizing Faustmann’s unambiguous results.UECE (Research Unit on Complexity and Economics) is financially supported by FCT (Fundação para a Ciência e a Tecnologia), Portugal. This paper is part of the Strategic Project PEst-OE/EGE/UI0436/2011 and also benefited from financial support under the project PTDC/EGE-ECO/113403/2009. University of California MRPI Project: Virtual Co-laboratory for Policy Analysis in Greater L.A
The effects of land-use development policies on forest management
This paper develops a model of a forest owner operating in an open-city environment, where the rent for
developed land is increasing concave in nearby preserved open space and is rising over time reflecting an
upward trend in households’ income. Thus, our model creates the possibility of switching from forestry to
residential use at some point in the future. In addition it allows the optimal harvest length to vary over time
even if stumpage prices and regeneration costs remain constant. Within this framework we examine how
adjacent preserved open space and alternative development constraints affect the private landowner´s
decisions.
We find that in the presence of rising income, preserved open space hastens regeneration and
conversion cuts but leads to lower density development of nearby unzoned parcels due to indirect dynamic
effects. We also find that both a binding development moratorium and a binding minimum-lot-size policy
can postpone regeneration and conversion cut dates and thus help to protect open space even if only
temporarily. However, the policies do not have the same effects on development density of converted
forestland. While the former leads to high-density development, the latter encourages low-density
development.FCT (Fundação para a Ciência e a Tecnologia
Continuous versus Discrete Time Forest Management Models with Carbon Sequestration Benefits
Forest literature uses both continous and discrete time models to study forest management problems, and when carbon sequestration benefits are considered, the results obtained in both approaches are not always equivalent. This issue is relevant from a policy point of view if credits are to be allocated to forest owners within the implementation of the Kyoto Protocol. This note explores the impact of different carbon sequestration
accounting methods on both settings. It studies the specific conditions for optimal rotation period and the value of a marginal unit of bare land on a one stand model and compare them with the long run optimal stationary
steady state of a forest vintage model.N/
Forest Vintages and Carbon Sequestration
In the current paper we examine the role of forest carbon sequestration benefits in optimal forest management. When carbon benefits are considered not only the forested area is relevant, but also the flow of carbon between land and the atmosphere through the carbon cycle. To account for all these impacts a multi-vintage forest setting is used, following Salo and Tahvonen (2004). The model is extended to three different carbon accounting methods to measure the benefits form carbon sequestration: carbon flow regime, tonne-year crediting and average storage. In the case of the carbon flow regime, the impact on the optimal management and allocation of land will depend upon the amount of carbon released when the forest is harvested. Under the other two accounting systems optimal steady state forest area will be increased, and in cases where optimal management imply cyclical harvesting, considering carbon benefits will always increase cycles dimension.N/
Innovation and environmental policy: Clean vs. dirty technical change
We study a two sector endogenous growth model with environmental
quality with two goods and two factors of production, one clean
and one dirty. Technological change creates clean or dirty innovations.
We compare the laissez-faire equilibrium and the social optimum and
study first- and second-best policies. Optimal policy encourages research
toward clean technologies. In a second-best world, we claim
that a portfolio that includes a tax on the polluting good combined
with optimal innovation subsidy policies is less costly than increasing
the price of the polluting good alone. Moreover, a discriminating
innovation subsidy policy is preferable to a non-discriminating one
Protest attitudes and stated preferences: Evidence on scale usage heterogeneity
We contribute to the stated preference literature by addressing scale usage
heterogeneity regarding how individuals answer attitudinal questions capturing
lack of trust in institutions and fairness issues. Using a latent class model, we
conduct a contingent valuation study to elicit the willingness-to-pay to preserve
a recreational site. We find evidence that respondents within the same class, that
is, with similar preferences and attitudes, interpret the Likert scale differently
when answering the attitudinal questions. We identify different patterns of
scale usage heterogeneity within and across classes and associate them with
individual characteristics. Our approach contributes to better a understanding
of individual behavior in the presence of protest attitudes
The Hyperbolic Forest Owner
This paper examines the implications of quasi-hyperbolic inter-temporal preferences to the Faustman model. The use of decreasing discount rates leads to dynamically inconsistent behavior. To solve this problem a two-stages optimization decision model is developed. The resulting actual cutting time will be anticipated compared to the Faustman optimal cutting time. If, alternatively, the equivalent constant rate of discount is the empirically observed discount rate, then the optimal cutting time is the same, but the present value of profits for the hyperbolic forest owner is always higher than the one resulting from the equivalent constant discount rate. All these results apply to both the single and the multiple rotation problems.N/
The Role of Forests as Carbon Sinks: Land-Use and Carbon Accounting
The use of forests as carbon sinks is examined by introducing carbon sequestration benefits’ accounting in a multi-vintage land allocation model. Following the IPCC, three carbon accounting methods are considered. We compare the results in each case with those without carbon sequestration, as well as the performances of the ton-year and the average methods (second-best) to the carbon flow (first-best) concerning optimal land allocation between forestry and alternative uses, total carbon sequestered, timber production and social welfare. A full proof of long-run optimality of steady state forest is provided. Numerical simulations are performed and results discussed illustrating the setup’s potential.Land Allocation Model, Forest Vintages, Carbon Sequestration, Carbon Accounting, Optimal Rotation, Transition/steady-state
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