Epsilon Archive for Student Projects

Abstract

Due to the world’s increasing scarcity of different dimensions of biodiversity there is a constant need for finding the right balance between economical concerns and nature conservation in forestry. The management of natural resources requires a good assessment of the productive stand value as well as costs of forgone opportunity. Such costs appear when setting the areas aside for nature conservation purposes. In this thesis calculations of opportunity costs of set-asides were based on differences in the holding value among three management scenarios with increasing level of restrictions:

I. Faustmann model scenario - forest management without restrictions concerning set-asides and applying optimal rotation age according to the financial maturity.
II. Higher rotation age scenario - forest management without restrictions concerning set-asides but with higher rotation ages, determined with respect to ecological and social values (rotations presently used in Poland).
III. Set-aside scenario - management where 26,4% of the forest area is excluded from production as set-asides and applying higher rotation ages on the rest of the area, determined with respect to ecological and social values (rotations currently used in Poland).

The data used for the analysis were collected from The Sulechow Forest District for the year 2007. Pine and Oak, species dominating in the area, on three representative site quality classes, were taken into account for the calculations. All together 417,5 ha of forest in 126 stands were examined.
The opportunity cost of the examined set-asides was expressed in terms of the present value difference compared to stands calculated according to scenario I, which was the reference one, and the set-aside scenario (III). The present value was calculated pursuant to the holding value equation, with 2% discount rate. The difference between I and III scenario was 12,03 millions PLN (3,45 millions €) for the whole area, which gives 28,8 thousand PLN/ha (8,26 thousand €/ha). The value of all the stands calculated according to the scenario III was 29,5% lower than for the Faustmann model scenario (I). The conclusion is that the non-timber value of a set-aside area should be at least as high as this opportunity cost of this area to outweigh the loss in timber production value, and thereby motivate the set aside economically.
The comparison made between the first and the second scenario shows how much the stand value is affected by the rotation age. The value of the second scenario, where rotation age was determined by the traditional Polish method, was 10,5% lower than the value of reference scenario where the soil expectation value maximization was used to determine the optimal rotation.