Three essays on forestry economics and management

Forest management strategies directly affect landowner welfare, and factors ranging from natural disturbances to institutional environments play important roles in influencing the outcomes for both landowners and society. This dissertation, consisting of three essays, delves into the forest sectors in both developed and developing countries with an aim of uncovering the impacts of various factors in forest management, as well as resulting welfare changes felt by landowners and society.

The first essay extends previous literature on natural disturbances and forest management, where a single disturbance and immediate clearcut after it are always assumed, through the introduction of multiple disturbances and flexible harvest timing. A Faustmann-type rotation model is developed and used to guide simulations of loblolly pine management in the southern United States. We show that failure to consider the possibility of multiple disturbances and the oversimplification of harvest rules after a single disturbance leads to suboptimal harvest decisions.

The second essay further extends the natural disturbance literature by considering the amenity value of unharvested forests in addition to timber value. As before, multiple types of disturbances as well as flexible harvest timing are incorporated into a Hartmann-type framework. Alternative amenity functions are employed in the simulations in which socially optimal harvest strategies are derived. We further examine the discrepancies between optimal harvest decisions of the landowner and those of the social planner, and compute social costs of ignoring amenity value. Our results show that ignoring amenity value can generate social costs and render harvest decisions socially suboptimal.

Forest production in developing countries also suffers from institutional weaknesses that distorts household decision making. The third essay therefore investigates impacts of village democracy on rural household welfare in China through changes in production efficiency in forestry and agriculture sectors using data collected from a household survey. A theoretical framework is first established, and based upon that framework stochastic production frontier models are estimated where democracy is incorporated as a potential factor affecting the variation of technical efficiency. We find that higher levels of village democracy significantly increase production efficiency. A first study on how village democracy affects rural household welfare, we provide policy lessons for other developing countries undergoing democratization.