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Cost-Sharing and Private Timber Stand Improvements: A Two-Step Estimation Approach

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The effects of cost-sharing and information assistance on nonindustrial private forest owners’ investment in timber stand improvements are analyzed using a two-step estimation method. We use survey data on Finnish nonindustrial private forestland owners’ stand improvements in 1994–1998, including precommercial thinnings, cleaning of seedling stands, and restoration thinnings of juvenile stands. The investment decision is theoretically considered in a two-period model with amenity values. To allow for the joint determination of participation in the cost-sharing program and the decision to invest, a two-step estimation method is used. The predicted probability of using public subsidy from the first-step model is included in the second-step model for the probability or relative extent of stand improvements. For robust inference, quasi-maximum likelihood estimation is applied. Public subsidy, personal assistance, and forest planning expectedly increased the probability of investing. Public subsidy especially had substantial effects on the probability and extent of stand improvements. Besides overcoming the endogeneity of cost-sharing, the two-step approach showed that personal assistance also encourages stand improvements indirectly through its effect on the use of public subsidy.
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Keywords: Forest policy instruments; nonindustrial private forest owners; probit model; tobit model; two-period model

Document Type: Research Article

Affiliations: 1: Ville Ovaskainen, Finnish Forest Research Institute, Unioninkatu 40 A, FIN-00170 Helsinki, Finland—Phone: +358 10 211 2226; Fax: +358 10 211 2104;, Email: [email protected] 2: Harri Hänninen, Finnish Forest Research Institute, Unioninkatu 40 A, FIN-00170 Helsinki, Finland—, Email: [email protected] 3: Jarmo Mikkola, Finnish Forest Research Institute, Unioninkatu 40 A, FIN-00170 Helsinki, Finland—, Email: [email protected] 4: Emmi Lehtonen, University of Helsinki, Dept. of Forest Economics, PO Box 27, FIN-00014, Helsinki, Finland—, Email: [email protected]

Publication date: 2006-01-01

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.

    2016 Impact Factor: 1.782 (Rank 17/64 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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