Journal of Forest Economics > Vol 35 > Issue x

The Infinitely Worried Forest Owner Key Biotopes and Forest Certification in a Faustmann Model

Bengt Kriström, CERE, SLU-Umeå and Umeå University, Sweden, bengt.kristrom@slu.se Per-Olov Johansson, Stockholm School of Economics and CERE, Sweden,
 
Suggested Citation
Bengt Kriström and Per-Olov Johansson (2020), "The Infinitely Worried Forest Owner Key Biotopes and Forest Certification in a Faustmann Model", Journal of Forest Economics: Vol. 35: No. x, pp x-xx. http://dx.doi.org/10.1561/112.00000502

Forthcoming: 01 Mar 2020
© 2019 Bengt Kriström and Per-Olov Johansson
 
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In this article:
1. Introduction
2. The Model
3. Conclusion
Appendix
References

Abstract

In this note, we consider a case when a forestry property may lose its market value through “political risk”, illustrated here by it being classified as containing a key biotope. If a key biotope is found on a forest property in Sweden, the wood is almost impossible to sell. We show how the Faustmann formula is modified in this case and identify a “balance sheet” effect and a shortened rotation period. The theory seems to have some empirical support, given observed changes in bank lending contracts and alleged changes in forester’s behavior to reduce the “political risk”.

DOI:10.1561/112.00000502