Journal of Forest Economics > Vol 18 > Issue 1

Assessing non-industrial private forest owners’ attitudes to risk: Do owner and property characteristics matter?

Mats Andersson, mats.o.andersson@slu.se
 
Suggested Citation
Mats Andersson (2012), "Assessing non-industrial private forest owners’ attitudes to risk: Do owner and property characteristics matter?", Journal of Forest Economics: Vol. 18: No. 1, pp 3-13. http://dx.doi.org/10.1016/j.jfe.2011.05.001

Publication Date: 0/1/2012
© 0 2012 Mats Andersson
 
Subjects
 
Keywords
JEL Codes:Q23D81
RiskAttitudesNIPFCharacteristicsProbit
 

Share

Download article
In this article:
Introduction 
Hypothesis 
Data and methods 
Results 
Conclusion and discussion 

Abstract

This study relates owner and property characteristics to non-industrial private forest (NIPF) owners’ attitudes to financial risk-taking in forestry decisions. Using a two-period mean-variance setting, the harvesting decisions of NIPF owners are examined with the aim of measuring their willingness to take risks. Since willingness to pay for reduction of risk is empirically unobservable, I rely on an index of NIPF owners’ attitudes to risk from a hypothetical survey question involving financial risk. According to the index, respondents (owners) are categorized as risk-averse, risk-neutral or risk-seeking. I apply a probit analysis to test how owner and property characteristics influence the NIPF owners’ attitudes to risk. The results show that characteristics influence the formation of risk attitudes. More explicitly, a longer period of ownership increases the probability that the owner is risk-averse, while increased time in the forest conducting silvicultural work increases the likelihood that an owner is risk-seeking. The results also show that female NIPF owners are more risk-seeking than male owners. The study fills a knowledge gap in the literature, relating owner and property characteristics to management decisions. Inclusion of risk attitudes and the judgement of risks into studies of NIPF owners’ management can help to understand why NIPF owners’ harvesting may deviate from net present value maximisation.

DOI:10.1016/j.jfe.2011.05.001