A comprehensive, updated guide to applying economic principles for effective forest management and policy.
A firm grounding in economics is integral to sound forestry management, investment, policies, and practices. Forest Economics, Revised and Expanded Edition, a full revision of the widely used 2011 text, is an essential textbook for forestry students. It covers the basic economic concepts, principles, and constructs and shows how these are applied in private and public forestry decision-making. The goal is to lead readers to understand how to use land, labor, and capital to produce goods and services from forests in ways that will best meet the needs of people.
This comprehensive edition—which systematically covers modern forest management, timberland investment, and policy issues—contains new data, examples, and applications of economic principles throughout, along with updated references and study questions. Additional content is provided in several significant new areas:
• Forest finance and forestland investment/ownership, including financial economic models
• Simple interest rate and risk measurements
• Market distortion
• Consumer theory
• Priced non-timber values and payment for ecosystem services
• Land rent theory
• The economics of forest management planning and forest health/wildfire economics
• An international comparison of forest taxes and fees
• The measurement of competitiveness in international trade
• A new theory of foreign direct investment
The advanced empirical presentation and ongoing close attention to new developments in the field reflect the authors’ decades of teaching experience and dedication to smart forest management in the United States and Canada. This is an integral book for undergraduate and graduate students of forest economics and resource management and policy, as well as for practitioners and investors in timberland and the forest industry.
Forewords / Peter Deegen and Michael Jacobson
Preface
Conversion Factors
PART 1 Markets, Government, and Forest Investment Analysis
1 Forestry's Economic Perspective
Forestry from an Economic Viewpoint
Basic Economic Questions
Mixed Capitalism and the Role of Government
Economic Objectives: Efficiency and Equity
Forests as Economic Resources
Why Forest Economics?
Economic and Financial Decision Making
2 Market Economies and the Government
Economic Efficiency and Opportunity Costs
The Theory of Production
Allocating Inputs Among Alternative Uses
An Example
Comsumer Theory
Supply, Demand, and Price Equilibrium
Market Failures and Externalities in Forestry
Government Intervention and Policy Failure
3 Forest Investment Analysis and Valuation
Time and the Role of Interest
Compounding, Discounting, and Present Values
Criteria for Investment Decisions
Risk and Uncertainty
Integrating Economics with Silviculture
Valuing Pre-Merchantable Timber
Taxes and Social Considerations
PART 2 The Forest Sector: Land Timber, and Non-Timber Forest Values
4 Timber Supply, Demand, and Pricing
The Forest Products Sector
Forest Products Supply and Demand
The Demand for Timber
Timber Supply
Long-Run Wood Supply Projections
Determinants of Stumpage Prices
Price Distortions
5 Non-Timber Forest Values
Priced Non-Timber Forest Values
Unpriced Values: A Problem of Measurement
Consumer Surplus as a Measure of Value
Evaluating Unpriced Recreation
Other Considerations in Valuing Recreational Resources
Externalities, Intrinsic Value, and Other Complications
6 Land Allocation and Multiple Use
Land Rent and Land Value
Intensity of Land Use
Extensive Margin of Land Use
Allocation among Uses
Combinations of Uses
Practical Difficulties
An Illustration: Payments for Environmental Services on Private Lands
PART 3 The Economics of Forest Management
7 The Optimal Forest Rotation
Optimal Rotation in Discrete Format
Optimal Rotation Age in Continuous Format
Cutting Cycle for an Uneven-Aged Stand
Comparisons with Other Rotation Criteria
Other Impacts on the Optimal Rotation
Hartman Rotation Age
8 Forest Management Planning, Regulating Harvests over Time, and Wildfire
Economics
The Stand and the Forest
Economics of Forest Management Planning: Maximizing Forest Asset Value
Regulating Forest Harvest over Time: Market Solutions and Limitations
The Regulated Forest
Transition to a Normal Forest
Sustained Yield Rationale and Critique
Timber Harvests over Time in the Absence of Sustained Yield Policy: Market as
a Regulator
Forest Health Economics: The Case of Wildfire Management
9 Long-Term Trends in the Forest Sector and Silvicultural Investment
Long-Term Trends in the Forest Sector
A Conceptual Model for Silvicultural Investment
Factors Influencing Silvicultural Investment on Private Lands
Silvicultural Investment on Public Lands
Planted Forest Development in the Southern United States
PART 4 Economics of Forest Policy and Forestland Investments
10 Property Rights
Property Rights, Property Value, and Economic Efficiency
Evolution of Forest Property Rights
Dimensions of Property and Their Economic Implications
Common Forms of Forest Tenure
Economic Issues of Tenure Systems
Two Examples
Byond the Binary of Private and Public Ownership
11 Forest Taxes and Other Charges
Characteristics of Forest Charges
Property Taxes
Levies on Harvests or Timber to Be Harvested
Charges for Rights: Land Rentals and Fees
Forest Tax-Related Issues in the United States
Tax Incidence and Deadweight Loss
Other Economic Considerations
12 Forestland Investments
Types of Forestland Ownership
Efficient Portfolio Theory and Asset Pricing Models
The Rise and Fall of Industrial Forestland Ownership
The Rise of Institutional Forestland Ownership
Empirical Evidence: The Financial Performance of Forestland Investments
Summary
Appendix
PART 5 Forest Economics in Global Perspective
13 Forest Products Trade
Trends in International Forest Products Trade
Comparative Advantage and the Principle of Specialization
Production Possibilities and Terms of Bilateral Trade
Factors Influencing International Forest Products Trade
The Political Economy of Trade Restrictions
Measuring Competitiveness in Forest Products Trade
Foreign Direct Investment in the Forest Industry
14 Global Forest Resources and the Environment
Global Forest Resources
Population, Economic Growth, and the Environment
Forest-Based Industrialization and Tropical Deforestation
Forests and Climate Change
Emerging Issues in Forest Economics
Answers to Numerical Review Questions
Index
Daowei Zhang is George W. Peake Professor of forest economics and policy and associate dean of research in the College of Forestry, Wildlife, and Environment at Auburn University in Alabama. He worked at the Ministry of Forestry and China Development Bank and served as a senior forestry officer and team leader for climate change and resilience at the Food and Agriculture Organization of the United Nations. Among his publications are From Backwoods to Boardrooms: The Rise of Institutional Investment in Timberland and The Softwood Lumber War: Politics, Economics, and the Long U.S.-Canadian Trade Dispute.
Peter H. Pearse is a professor emerit in the Faculty of Forestry at the University of British Columbia and is a registered professional forester (retired). He also served as a board member for Alcoa and is a member of the Order of Canada.
