Sandrine Costa

Economics of species change subject to risk of climate change and increasing information: a (quasi-)option value analysis

ContextIn the context of climate change, several forest adaptation options have to be advocated such as a shift to more resistant species.AimsWe provide an economic analysis of timber species change as a tool for adapting forests to climate change.MethodsWe use the framework of cost–benefit analysis, taking uncertainty into account both exogenously (sensitivity analysis) and endogenously [(quasi-)option value calculations]. We apply the method to assess the economic rationale for converting Norway spruce stands to Douglas-fir in the French Black Mountain.ResultsWe find that the Douglas-fir conversion is land expectation value (LEV) maximizing under a wide range of a priori (subjective) probabilities attached to high mortality of Norway spruce under climate change (for probabilities higher than 0.25–0.31). If information about the impacts of climate change is expected to increase over time, and given the large sunk costs attached to conversion, a delay strategy may be preferable to transition and to status quo when the impacts of climate change on Norway spruce mortality are sufficiently ambiguous. In such cases, getting information earlier increases the LEV by €5–60/ha.ConclusionBeyond the specifics of the case study, this paper suggests that quasi-option value is a relevant tool to provide insights to forest owners dealing with adaptation decisions in the context of climate change.

Making or Buying Environmental Public Goods: Do Consumers Care?

Firms may voluntarily abate pollution using one of two options: internalizing their own external effects and incurring abatement costs (“making”), or delegating environmental protection by purchasing offsets (“buying”). We aim to elicit consumers’ willingness to pay for producers’ use of the “making” option as compared to the “buying” option, controlling for spatial effects (joint local public goods), and level of greenhouse gas emissions. Using a stated-choice survey of 722 respondents, we find consumers are more willing to pay for a “making” policy. Consumers do significantly care for the producers’ use of offsets when the level of local externalities is controlled for. (JEL Q54, Q58)

Volatilité des cours du bois par essence et qualité : perspectives pour la gestion forestière

Market prices for timber are a crucial factor in forest management. Their variability over time is measured for individual species by an index called the volatility index. This article provides a tentative approach to the study of the volatility of timber prices. It proposes a method for calculating volatility and the difference between volatility and standard deviation, which is another statistical element used to describe the fluctuations of a variable. It then provides an order of magnitude of the volatility of some of the main forest species in France on the basis of calculations using the data published every two months in the La Foret privee review. Finally, these volatilities are analysed taking into consideration the particular species, the grade of the wood and the period of assessment.

Certification of sustainable forest management: differentiation strategies and asymmetric information

The aim of the paper is to analyse the consequences of Sustainable Forest Management (SFM) on the forest sector and social welfare. In a context where buyers are free to choose an outside option (alternative material), we analyse the optimal management behaviour of foresters. A vertical differentiation set-up a la Mussa-Rosen makes it possible to examine the European forest context: a large number of foresters facing a heterogeneous demand. Management decisions depend on related costs. Whatever management costs, product differentiation always increases the profits of wood suppliers as well as social welfare. However, the impact of SFM on consumer surplus is uncertain: SFM results in more diversification but also entails a smaller quantity of wood marketed at the equilibrium. Associating a fixed certification cost to SFM reduces the number of wood suppliers turning to sustainable management. For a high certification cost, profits made by wood suppliers might turn out to be inferior to those made when only standard wood is marketed.

The impact of goals and public rewards on a prosocial behaviour: an exploratory economic experiment

Given that private rewards have mixed effectiveness in the realm of prosocial behaviours (Bénabou and Tirole, 2006), we explore whether a ‘public’ reward (denominated in additional units of public good provision) successfully encourages prosocial behaviour in the form of increased donations to a project aimed at improving atmospheric air quality. Our experiment consists of a dictator game designed to address (1) if the presence of a goal increases voluntary contributions to improving environmental quality and (2) if an additional public reward further increases voluntary contributions. We find a significant goal effect overall, yet no added public reward effect.