Journal of Forest Economics > Vol 14 > Issue 4

Ice damage and forest stand management

Robert Goodnow, Jay Sullivan, , Gregory S. Amacher
Suggested Citation
Robert Goodnow, Jay Sullivan and Gregory S. Amacher (2008), "Ice damage and forest stand management", Journal of Forest Economics: Vol. 14: No. 4, pp 268-288.

Publication Date: 0/11/2008
© 0 2008 Robert Goodnow, Jay Sullivan, Gregory S. Amacher
JEL Codes:Q23Q54D81
Catastrophic damageFaustmann modelUncertaintyNon-industrial forest landowners


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In this article:
Landowner decision model in the face of ice damage 
Simulation methods 
Results and discussion 


Large-scale economic losses from ice glaze and freezing precipitation, common among pine plantations in the many parts of the eastern United States, serve to retard non-industrial private landowner investments in forest land. We examine the consequences of ice storms to private forest management by incorporating ice damage into a Faustmann-based landowner decision simulation, in which the landowner chooses rotation age, timing and intensity of thinning, and planting density to maximize land value. These and other site factors determine tree damage should an ice storm arrive before rotation age. A simulation is conducted for loblolly pine using an individual tree growth and yield model, and optimal management regimes are determined under a range of discount rates, site productivity classes, and storm arrival dates. Unlike some Faustmann-based models of catastrophic events, empirical damage functions are employed to adjust tree growth forward to the rotation age in periods after ice arrives or a thinning has taken place. Damage depends on pre-storm tree characteristics and is endogenous relative to stand management decisions. Results show net present value losses ranging between 4.72% and 21.77% for ice-damaged stands, compared with undamaged stands. Surprisingly, when comparing myopic landowner decisions that do not account for ice damage to decisions made with perfect foresight, we find that in many cases stand management may be best left unaltered when destructive ice storms are considered. The ice-mitigating management strategies in the majority of scenarios were identical or close to those strategies that did not take potential ice damage into account. Further, even where ice-mitigating decisions are found to differ from decisions that do not account for ice damage, in almost all cases we show that stand management should simply be adjusted after occurrence of a storm, likely a consequence of our stands not being completely destroyed in ice events. This differs from some previous Faustmann-based models of catastrophic risk where it is assumed that a new rotation is started immediately after a damaging event arrives. Finally, the potential gains from managing stands to mitigate ice damage are often smaller than the potential losses that occur when storms fail to materialize.