A dynamic approach of forest owner self-insurance behavior in risky forest management: saving versus sylvicultural practices
2007
Brunette , Marielle (INRA (France). UMR 0356 Laboratoire d'Economie Forestière) | Couture , Stéphane (INRA (France). UMR 0356 Laboratoire d'Economie Forestière) | Langlais , Eric (Université Nancy 2(France). UFR AES)
The objective of this article is to study the forest owner’s coverage strategies in the presence of natural hazards. We develop a theoretical model which considers two periods. In this model, the private forest owner can either save a part of his/her income in order to take precautions against natural hazards or adopt sylvicultural practices. Thus we want to compare a financial prevention tool with a physical one. Our analysis also consider the non-profit services provided by the forest. We produce several comparative static analysis especially on initial wealth, on initial forest stock and on timber prices. We show that, under some assumptions, accumulation of savings and sylvicultural practices may be seen as perfectly substitutable for the forest owners. Wealso show that this potential substitutability do not imply that the two hedging tools act in the same way on the forest owners behaviour and do not involve that the forest owners react to some given shocks in the economy by the same decisions.
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