John E. Wagner

Urban forests and pollution mitigation: analyzing ecosystem services and disservices.

The purpose of this paper is to integrate the concepts of ecosystem services and disservices when assessing the efficacy of using urban forests for mitigating pollution. A brief review of the literature identifies some pollution mitigation ecosystem services provided by urban forests. Existing ecosystem services definitions and typologies from the economics and ecological literature are adapted and applied to urban forest management and the concepts of ecosystem disservices from natural and semi-natural systems are discussed. Examples of the urban forest ecosystem services of air quality and carbon dioxide sequestration are used to illustrate issues associated with assessing their efficacy in mitigating urban pollution. Development of urban forest management alternatives that mitigate pollution should consider scale, contexts, heterogeneity, management intensities and other social and economic co-benefits, tradeoffs, and costs affecting stakeholders and urban sustainability goals.

Estimating the economic impacts of tourism

Abstract An important component in assessing the merits of tourism focusing on the ecosystem is determining its economic impact in the designated area. This study uses a social accounting matrix to examine the economic effects of tourism in a Brazilian region. The matrix provides a systematic framework for synthesizing and displaying the data on a regions economy and estimating regional economic multipliers. Most of the inputs, commodities, and capital used in the region are imported. Therefore, monies tourists spend are used to pay for these imports and will generate only a small economic impact. Consequently, there is little incentive to stop current economic activities that are probably counter to ecosystem-based tourism.

A role for economic analysis in the ecosystem management debate

Abstract Ecosystem managements underpinnings have been biological in nature—the concern for ecosystem integrity, health, and resilience. This intent has been translated into a similar societal goal. However, its philosophy is still evolving biologically and socially. Since the geographic boundaries of an ecosystem may probably cross many different ownership types, this leaves landowners wondering how this new management approach will affect them. We discuss the role of economics within the ecosystem management debate. In addition, we also examine three existing economic analytical techniques that can be used to analyze ecosystem management, discuss the contributions of these techniques and their limitations, and identify three key points that an economic analysis should address. Finally, we survey five examples of ecosystem management in practice on United States Department of Agriculture Forest Service lands.

Financial Analysis of Diameter-Limit Cut Stands in Northern Hardwoods

Diameter-limit cutting of stands in the US northeast is a common practice often thought to give the landowner the highest financial returns. A landowner’s decision to diameter-limit cut or use some other harvesting option on a given stand involves examining mutually exclusive investments. Previous research that compared diameter-limit cutting to other harvesting options implicitly assumed these were independent investments. This paper develops analytical models to examine a variety of harvesting options for a single stand, including diameter-limit cutting, as mutually exclusive investments, and with stand and financial parameters defined by the landowner. These models are used to examine implications of changes in the financial parameters for harvesting options. It is found that no simple guidelines can be laid down for choice of harvesting options to maximise the net present value of stands with respect to diameter-limit cutting compared to other harvesting options. The empirical examples reveal that which harvesting option has the largest net present value depends on the parameters of the landowner’s stand and the financial parameters chosen by the landowner. The analysis illustrates the importance of understanding the interrelationships between the financial and stand parameters in determining whether a diameter-limit cut is in fact the best financial option for a landowner.

Misinterpreting the Internal Rate of Return in Sustainable Forest Management Planning and Economic Analysis

Sustainable forest management planning includes accounting for revenues and costs that accrue throughout time. While debate continues as to the how to account for these cash flows, the most used techniques are net present value, benefit cost ratios, and internal rate of return (irr). Managing forests sustainably depends critically on interpreting the results and management implications of these techniques accurately. It is appealing to equate the irr with a market-derived rate of return given its definition. Unfortunately, its mathematical derivation does not support this interpretation and past use of irr often illustrates this confusion and misinterpretation. The irr only reflects the amount and timing of the net cash flows for a given venture and does not include any social, economic, or other external factors found in market-derived discount rates. Therefore, the irr does not reflect an appropriate rate of return or opportunity cost of capital for sustainable forest management. My purpose is to provide a theoretical argument that can be used to help correct this misinterpretation and stimulate discussions on the economics of sustainable forest management.

The Simon-Ehrlich Bet: Teaching Relative Vs. Absolute Scarcity:

Absolute resource scarcity is all too real for many students, especially those from noneconomic disciplines. They have a Malthusian economic worldview. We describe a pedagogical model using “The Bet” between Paul Ehrlich and Julian Simon as its focus. The model includes a “Bet” – the students taking the Ehrlich position; a directed discussion providing students with an approach to determine who wins the Bet; and a written assignment, oral presentations, and reflection. The learning outcomes are: 1) students examine their Malthusian beliefs through developing hypotheses, analyzing and testing them, and writing and presenting their conclusions orally; 2) that markets incorporate changes in substitutes, technology, recycling, and discovery; 3) that market prices rise and fall in the short term but it is the long term that illustrates how markets respond to changes in information; and 4) students reflect critically on their initial absolute scarcity assertion.

Putting Samuelson's Economics of Forestry into Context: The Limits of Forest Economics in Policy Debates

Paul Samuelson’s 1976 paper, “Economics of Forestry in an Evolving Society (EFES)”, is justifiably hailed as one of the most important articles in the field of forest economics. A relatively recent review of the optimal rotation literature found the article to be the second most cited article (Newman, 2002), following only Faustmann’s (1849) original study. It pointed the field in a number of important directions and heralded a very rapid expansion in the literature as more individuals began to examine a host of economic questions related to forests and forest management. However, it is important to consider the context in which Samuelson’s work was written. The paper was a keynote presentation at the Economics of Sustained Yield Forestry Symposium held at the University of Washington on 23 November 1974. Professor Barney Dowdle organized the symposium and the speakers, who were not forest economists, came from more mainstream economic disciplines. The symposium was attended by over 150 people and reflected a broad diversity of forestry experience from throughout North America. For years after the symposium, the presentations were copied and passed on to students and practitioners as only two of the papers were actually published (Samuelson’s and John Ledyard and Leon Moses’) and only Samuelson’s was easily accessible. There were five papers presented at the symposium touching on a variety of issues associated with the topic of sustained yield. In addition to Samuelson, Jack Hirshleifer of UCLA discussed the trade-off between sustained yield and capital theory; John Ledyard and Leon Moses of Northwestern University discussed economic dynamics and land use change in relation to forestry; Marc Roberts of Harvard discussed sustained yield and economic growth; Anthony Downs, then Chairman of the Real Estate Research Corporation in Chicago, discussed sustained yield and American social goals. Together, these papers made a strong argument that worshipping at the altar of sustainability (specifically sustained