Application of the generalized Faustmann model to uneven-aged forest management

In this paper, a generalized Faustmann model is developed for uneven-aged management to allow the number of years and the level of residual growing stock to vary from one cutting cycle to the next. Comparative static analyses are conducted to determine the effect of changes in interest rate, stumpage price of the trees selected for harvest, the stumpage value of the residual growing stock, and the future land value on the decision variables. The model is then applied to study the uneven-aged management of a loblolly-shortleaf pine stand in south central U.S. to determine the length of the cutting cycle and the level of residual growing stock for the first cutting cycle as well as for a case involving four cutting cycles. Sensitivity analyses reveal that for the uneven-aged loblolly-shortleaf pine stand both the length of the cutting cycle and the level of the residual growing stock are very sensitive to changes in land value in the future, in the stumpage prices of trees selected for harvest, in the stumpage prices of the residual growing stock, and in the interest rate.     

Adaptive thinning strategies for mixed-species stand management with stochastic prices

This paper presents an efficient and flexible approach of determining optimal thinning strategies for mixed-species stands with stochastic timber prices. The approach aims to determine the optimal stock of each species to be maintained in the stand conditional on the observed stand state and timber prices, whereas thinning intensity is given by the difference between the existing and the optimal stocks. For demonstration purpose, the approach is applied to determine the optimal thinning strategies for an example stand of Scots pine (Pinus Sylvestris L.) and Norway spruce (Picea abies L. Karst.) in northern Sweden. The optimal stock of each species is formulated as a parametric function of stand age and stumpage prices of the respective species. A reservation price function is constructed to determine the optimal time of clearcut based on the observed stand state and timber prices. The parameters of the optimal stock-level and reservation price functions are determined by maximizing the expected present value of the stand. The results indicate that using the optimal stock-level function approach can significantly improve the thinning decisions for mixed species stand with stochastic timber prices.     

Land speculation and interest rate subsidies as a cause of deforestation: The role of cattle ranching in Costa Rica

Land speculation by cattle ranchers is considered a principal cause of deforestation in Latin America, in particular in combination with (previously) widely provided interest rate subsidies. Proof for the hypothesis that land speculation leads to inflated rates of investment in land is, however, relatively limited and invariably related to the question of whether land prices tend to rise over time. Based on the Neoclassical investment theory with adjustment costs we develop a stochastic cattle ranching model in which land prices are modelled as geometric Brownian motion, to evaluate the effect of expected fluctuations in land prices on land investment decisions by cattle ranchers in Latin America. For a case study in the Atlantic Zone of Costa Rica, results show that the expected rate of investment is almost 35% underestimated in case land prices are assumed constant instead of fluctuating according to the standard deviation, while abolition of interest rate subsidies leads to an almost 15% decrease in the expected rate of investment. Consequently, it is shown that variability in land prices alone is a sufficient condition for land speculation, inflated rates of investment in land, larger farm sizes and, thus, higher rates of deforestation in agrarian frontier areas, while this process is further promoted by subsidized livestock credit or any other form of agricultural subsidy that increases the marginal production value of land.     

Extra-legal land market dynamics on a Guatemalan agricultural frontier: Implications for neoliberal land policies

Neoliberal land policies such as land administration seek to improve property rights and the efficiency of land markets to boost rural economic production. Quantitative studies of pre-existing land markets can help planners to tailor these policies to local conditions. In this article we examine an extra-legal land market currently being modernized by a World Bank-sponsored land administration effort. Specifically, we use a hedonic-type revealed preference model and household survey data to estimate the factors affecting extra-legal land prices along an agricultural frontier in Petén, Guatemala. Our model indicates that land value is significantly affected by land attributes including location, tenure status, presence of water, distance to roads, and distance to landowners’ homes, and that land prices in the northwestern Petén are estimated to have risen on average 26.5% per year between 1977 and 2000. We contend that this rate of increase provides a strong incentive for colonists to speculate in land rather than invest in state sanctioned property rights. We conclude that if frontier development programs, such as land administration, are to become attractive to settlers in Petén and elsewhere, they must compete favorably with economic incentives associated with land speculation, or alternatively, target landowners who are not interested in playing the land market.     

农村集体经营性建设用地价格影响因素的实证分析*——基于江西省余江县179份交易案例

[目的]确定农村集体商服用地、工业用地价格的影响因素,为科学评估农村集体经营性建设用地地价、构建城乡统一建设用地市场提供参考。[方法]利用全国农村土地使用制度改革试点之一的江西省余江县179个交易案例,运用特征价格模型分析农村集体商服用地、工业用地价格的影响因素及各类因素的贡献率。[结果](1)农村集体商服用地价格的主要影响因素依次为乡镇财政收入、人均纯收入、到客运站距离、到国道的距离、教育设施;农村集体工业用地价格的主要影响因素依次为人均纯收入、人均农村居民点面积、到客运站的距离、到国道的距离。(2)社会经济因素、区位交通因素和公共设施因素对集体商服用地价格的贡献度分别为69. 0%、20. 4%和10. 6%;社会经济因素和区位交通因素对集体工业用地价格的贡献度分别为52. 8%和47. 2%。[结论]总体上与国有城镇建设用地价格存在共性规律,但存在部分因素与国有建设用地价格规律存在差异,农村集体经营性建设用地估价不宜完全套用城镇建设用地的思路。     

Representing climatic uncertainty in agricultural models – an application of state‐contingent theory

The state‐contingent approach to production uncertainty presents a more general model than the conventional stochastic production approach. Here we investigate whether the state‐contingent approach offers a tractable framework for representing climatic uncertainty at a farm level. We developed a discrete stochastic programming (DSP) model of a representative wheat–sheep (mixed) farm in the Central West of NSW. More explicit recognition of climatic states, and associated state‐contingent responses, led to optimal farm plans that were more profitable on average and less prone to the effects of variations in climate than comparable farm plans based on the expected value framework. The solutions from the DSP model also appeared to more closely resemble farm land use than the equivalent expected value model using the same data. We conclude that there are benefits of adopting a state‐contingent view of uncertainty, giving support to its more widespread application to other problems.     

Shadow pricing diversity in U. S. national forests

Tobit estimation of the market value of timber sales in national forests of North Carolina demonstrates the important effect of stand diversity on the formulation of bid prices for mixed-species timber tracts. The hedonic model generates a shadow price for diversity according to changes in bid prices, an effective shift in the demand curve for auctioned tracts due to stand diversity attributes. This approach contrasts with traditional shadow price analyses that focus on the supply effects of environmental constraints. Results are corrected for the effects of bidder participation, market conditions, production costs, and other stand attributes. Econometric results demonstrate that stand heterogeneity is a highly significant factor influencing the market value of timber sales from national forests of the Appalachian region. Greater heterogeneity results in lower bid prices for timber sales, indicating a positive shadow price for maintenance of stand diversity.     

The incidence of agricultural policy on the land market in Poland: Two-dimensional and multilevel analysis

Research has shown that the reform of the CAP which broke the link between subsidies and production (the decoupling reform) has had little effect on farmers’ demand for land under the SPS (Single Payment Scheme) system. For this reason, in the conditions of the SPS, there is petrifaction of the structure of agricultural land, and an upward trend in prices on the market for agricultural land should not be expected to continue in the long term. Under the conditions of the SAPS (Single Area Payment Scheme), which applies in the EU-12 new Member States, the position in the market for agricultural land is different. However, most research carried out in Europe relates to the SPS system, where marginal changes in the value of land are identified as a result of the incidence of agricultural policy, as well as quantitative and qualitative attributes of particular properties. Under SAPS, these issues have not been sufficiently investigated. The authors have attempted to fill that gap, constructing a two-dimensional and multilevel econometric model for land prices in a leading agricultural region of Poland based on a sample of 653 transactions in the years 2010–2013. The aim is to determine how policy, as well as various quantitative and qualitative features, including location factors, affect the prices of land under SAPS. The results indicate, among other things, the key importance of the functional type of rural areas – properties in agrotouristic areas gained 43% higher prices on average than those in agricultural areas. Another finding of interest is that LFA and agro-environmental payments decapitalise the value of land.     

Could the Faustmann model have an interior minimum solution?

The growth of an even-aged stand usually follows a S-shaped pattern, implying that the growth function is convex when stand age is low and concave when stand age is high. Given such a growth function, the Faustmann model could in theory have multiple optima and hence an interior local minimum solution. To ensure that the rotation age at which the first derivative of the land expectation value equals zero is a maximum, it is often assumed that the growth function is concave in stand age. Yet there is no convincing argument for excluding the possibility of conducting the final harvest before the growth function changes to concave. We argue that under normal circumstances the Faustmann model does not have any interior minimum. It is neither necessary nor proper to assume that the growth function is concave in the vicinity of the optimal rotation age. When the interest rate is high, the optimal rotation may lie in the interval on which the growth function is convex, i.e. before volume or value growth culminates.     

土地收益的期望价值估算研究——无林地及未成熟林分的价值估算

通过将森林经营区分为间断性经营和永续经营两种情况,再分别考虑无林地和有林地,对林地及林分价值进行了推导,并得出了计算公式。其推导结果表明,不管是采取间断性经营还是永续经营,不管林木蓄积是否正常,也不管是独立经营的区域还是另一区域的组成部分,土地的林业生产价值都维持不变。     

FOOD SECURITY IN KWAZULU: RESULTS OF A HOUSEHOLD-BASED PROGRAMMING MODEL

A mathematical programming model of rural KwaZulu, excluding three northern districts, was developed to simulate agricultural production in regions of high and low cropping potential. This model aggregates enterprise levels predicted for four representative households of which two are in the high-potential region and two in the low-potential region. Several economic scenarios are simulated with the model to predict, inter alia, responses to changes in cereal prices, input subsidies, changes in off-farm employment and a rental market for crop land. Long-run food supply response is estimated to be inelastic with respect to changes in product and input prices. Higher food prices harm the majority of rural households. Lower input prices have little impact on household welfare. Conversely, it is predicted that a rental market for arable land could have a large positive impact on crop production and would improve household welfare.     

Farmland prices and land-use changes in periurban protected natural areas

This paper provides empirical and conceptual insights in analysing the factors that determine the prices of farmland within Protected Natural Areas that are close to densely populated urban areas, the changes in land use experiences as well as the additional control policies needed to curb this unsustainable trend.The Urdaibai Biosphere Reserve nearby the metropolitan area of Bilbao (Basque Country, Spain) is the case study considered and its bordering non-protected rural area is used as a reference for comparison. A spatial hedonic farmland price model is estimated and the willingness of land purchasers to pay for different farmland characteristics quantified both inside and outside the Urdaibai Biosphere Reserve. The main results are that: (1) residential development is taking place in all categories of farmland, (2) aside from neighbouring prices, farmland prices depend on different factors depending on whether the marketed plots stand inside or outside the Protected Natural Area, (3) the “reserve effect” on land prices is less powerful than the “proximity to the metropolitan area (and motorway) effect” observed from villages of the non-protected area located in the 3rd crown of Bilbao, (4) the reasons for farmers non-compliance with policy regulations is the necessary knowledge base for the farmland conservation policy design and (5) in the light of the results, three development-control policy instruments such as Payments for Ecosystem Services, Tradable Planning Permits and development-taxes are discussed considering the factors that could improve compliance.     

Optimal rotation with declining discount rate

In recent years it has been argued, from many perspectives, that the further into the future a value flow occurs, the lower is the appropriate discount rate for it. National governments are now beginning to authorise such declining discount rates. This viewpoint can be, and has been, formalised in various ways, and has been applied to evaluating forestry investments of given durations. When the optimal duration of investment is itself the issue, new problems arise. Lower discount rates make subsequent rotations longer than earlier ones, and for a given length more valuable than they would otherwise be. This affects the optimal length of earlier rotations, which in turn may affect the discount rate profile applicable to later ones. In the absence of analytical solutions for the optimal sequence of rotations, numerical protocols are needed. The results arising are mostly in accord with expectations. If the change of discount rate is due to expected changes of circumstance that are actually realised, then the optimal sequence of rotations will remain as initially determined. If, however, it is due merely to the particular time perspective of the present generation, rotations will be revised by future generations. This will lead to a sequence of rotations similar to that deemed optimal at the current short-term discount rate. The most important reductions in profitability caused by choosing the “wrong” discounting protocol arise from the “wrong” rate, rather than by using declining rates as such.     

Pressler's indicator rate formula as a guide for forest management

In this paper, it is shown that Pressler's indicator rate formula is also the optimal condition for the determination of the optimal harvest age under the generalized Faustmann formula. In addition, a modern treatment of the quantity increment, quality increment, and price increment is presented. Pressler's indicator rate formula is then applied to determine the optimal harvest age in a dynamic world of unanticipated changes.     

基于超循环理论的土地利用结构预测模型与实证研究

研究目的：将超循环理论引入土地利用变化模型研究,构建一个新的用于土地利用结构预测的数值模型。研究方法：类比法,超循环模型,马尔科夫模型,数值拟合。研究结果：（1）土地利用系统是典型的达尔文系统,符合超循环模型描述的演化机制;（2）马尔科夫模型是超循环模型的特例,其土地利用类型转移概率矩阵方法可计算部分超循环模型参数;（3）深圳市的实证表明,在大部分土地利用类型预测中超循环模型比马尔科夫模型更加贴近现实,参数?值的可变性使得超循环模型更能表示外生因素的影响。研究结论：超循环模型是一个具有可行性和较强灵活性的土地利用变化模型,在未来具有一定应用前景。     

Assessing the value of non-marketable land: The case of Israel

Non-marketable land often receives a low economic value, leading to the inefficient use of land. Since there is little reference to this subject, it is appropriate to develop a method for estimating the real economic value of non-marketable land, particularly when designated for various public projects. This paper presents an economic model used for estimating the value of non-marketable land in Israel, based on various measures, such as the distance from Israel's central region, socio-economic state, and proximity to the sea. The model allows rapid estimation of land values when examining a certain location for public projects, hence intended to prevent inefficient land use and low profitability of these projects. The model was subsequently used to estimate non-marketable land in four different regions in Israel where there is an interest in establishing public projects. The findings of the model indicate that these lands have high, yet diverse economic values. Furthermore, the results show that the highest land value was calculated for the location where the largest area was allocated. Thus, the model allows the internalization of the true land costs and may assist to select the land with the highest economic feasibility for such projects, preventing the realization of projects that are not economically worthwhile. There are two main options to integrate such a tool in the decision making process: as a statutory tool, or as a tool to be used by environmental organizations.     

Measuring public agricultural research and extension and estimating their impacts on agricultural productivity: new insights from U.S. evidence

This article provides new estimates of the marginal product of public agricultural research and extension on state agricultural productivity for the U.S., using updated data and definitions, and forecasts of future agricultural productivity growth by state. The underlying rationale for a number of important decisions that underlie the data used in cost‐return estimates for public agricultural research and extension are presented. The parameters of the state productivity model are estimated from a panel of contiguous U.S. 48 states from 1970 to 2004. Public research and extension are shown to be substitutes rather than complements. The econometric model of state agricultural TFP predicts growth rates of TFP for two‐thirds of states that is less than the past trend rate. The results and data indicate a real social rate of return to public investments in agricultural research of 67% and to agricultural extension of 100+%. The article concludes with guidance for TFP analyses in other countries.     

Methodological limitations in the evaluation of policies to reduce nitrate leaching from New Zealand agriculture

The land‐use optimisation framework, NZFARM, has been promoted as a tool that can be used to assess the economic and environmental impacts of policy on regional land use. This paper outlines how methodological limitations presently restrict its capacity to provide meaningful insight into the relative value of alternative land‐use configurations. The model is calibrated using positive mathematical programming, which has been shown in the literature to result in models that yield arbitrary output outside of the calibrated baseline. There is a high likelihood that this is the case, as no validation appears to have been carried out. Significant model development will be required before NZFARM outputs can be used with any confidence to inform future policy development. We conclude with suggestions on how NZFARM and models of its kind can be further developed to improve their capacity for meaningful simulation.     

Measuring regional competitiveness in oilseeds production and processing in Nigeria: a spatial equilibrium modelling approach

The four main resource regions of Nigeria, namely, the East, Middle‐belt, West and North, differ in their endowments in the production and processing of oilseeds. The Federal Government has allocated resources to the oilseeds sub‐sector across the regions without apparent rational basis. Consequently, huge imports of oilseed products, high and unaffordable oilseed product prices, and the establishment of new oil mills in the face of frequent shutdowns and chronic under‐utilisation of existing mills, still characterise the sector. In this paper, a spatial equilibrium model of the Nigerian oilseeds economy is used to determine the optimal location and number of mills across the regions, and to establish regional competitiveness in aid of the planning and development of the oilseeds sub‐sector. In the model, production (farming and milling) activities are tied to arable land and milling capacity constraints. The shadow prices of the arable land and milling capacities are used as a measure of competitiveness. Results indicate that, because of its central location, the Middle‐belt is the most competitive in oilseeds production at a shadow value of N 18,400 per hectare of cultivated land, followed by the North, West and East regions. However, the East is the most competitive in oilseeds milling, followed by the West, due to their close proximity to ports of export. These results suggest that transport cost is the main determinant of the viability of oilseeds production and milling in Nigeria.