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Optimal Forest Conservation: Competitiveness Versus Green Image Effects

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Abstract:

This article provides a theoretical framework to study the behavioral and welfare effects of forest conservation, which leads to a binding harvesting constraint for landowners. The economy is modeled as a three-stage game by the interaction of the government's conservation policy, with consequent adjustments in the domestic timber market, and in output determination in a Cournot rivalry with the foreign forest industry. More specifically, we study how the forest industry's competitiveness constrains forest conservation and whether the “green image” demand resulting from forest conservation compensates the loss in competitiveness. It is shown that although the green image effect may locally be strong enough to even increase the profits of the domestic forest industry, at the socially optimal forest conservation level it never dominates the competitiveness effect. Hence, there is a trade-off between forest conservation and competitiveness. These findings are robust to the issue of whether timber markets are perfectly or imperfectly competitive. FOR. SCI. 47(2):178–187.

Keywords: Biodiversity; J51; JEL classification: Q23; L73; environmental management; forest; forest management; forest resources; forestry; forestry research; forestry science; harvesting constraint; natural resource management; natural resources; timber price bargaining

Document Type: Miscellaneous

Affiliations: 1: Department of Economics, P.O. Box 54 (Unioninkatu 37) FIN-00014, University of Helsinki, Finland, Fax: + 358-9-19124877 Erkki.Koskela@Helsinki.fi 2: Dept. of Economics and Management, P.O. Box 97 FIN-000N, University of Helsinki, Finland, Markku.Ollikainen@Helsinki.fi

Publication date: 2001-05-01

More about this publication?
  • Forest Science is a peer-reviewed journal publishing fundamental and applied research that explores all aspects of natural and social sciences as they apply to the function and management of the forested ecosystems of the world. Topics include silviculture, forest management, biometrics, economics, entomology & pathology, fire & fuels management, forest ecology, genetics & tree improvement, geospatial technologies, harvesting & utilization, landscape ecology, operations research, forest policy, physiology, recreation, social sciences, soils & hydrology, and wildlife management.
    Forest Science is published bimonthly in February, April, June, August, October, and December.

    2015 Impact Factor: 1.702
    Ranking: 16 of 66 in forestry

    Average time from submission to first decision: 62.5 days*
    June 1, 2016 to Feb. 28, 2017

    Also published by SAF:
    Journal of Forestry
    Other SAF Publications
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