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Forest Management and Economics in Soyang Watershed

TERRECO Cluster F-05

From 07/2012

Principal Investigator: Trung Thanh Nguyen, Thomas Koellner, John Tenhunen, Chan Ryul Park
Staff: Cosmas Lambini

Abstract: In recent forest economics literature, there is an increased interest in the role of forest ecosystem services as natural capital in economic production processes. Forest provides a range of services that are fundamentally important to society and the environment. The ecological and economic benefits of these services to society are still undervalued and the methods for evaluation are arguably limited, inconsistent, and incomplete. This evolving field is further faced with problems of defining limits of mulitifunctionality of forest ecosystem services, lack of reliable data for a concise and integrated valuation, spatial and scale issues and problems with coupling of existing ecological and economic methods for valuation. This study seeks to address some of the above raised challenges, particularly contributing to new methods for economic valuations.

Our research seeks to address three critical questions: (1) How does one measure economic values for water quality and forest recreation on the demand side? (2) What are the cost drivers for provision of biodiversity and carbon sequestration from the supply side? (3) What are the trades-offs related to incomes from forest farms, maintenance of water quality and land allocation for increased carbon stocks? We address these three questions by applying three models: (1) A meta-analysis model will be considered for monetary valuation estimates from the demand side. The study seeks to construct a database from Korean Environmental Institute (KEI) Valuation Studies and other accessible databases that review Willingness To Pay (median or mean) estimates as dependent variables for water quality and forest recreation sectors in South Korea. This database will be based on selected criteria as independent variables such as: (a) originality of initial study; (b) survey mode; (c) study location; (d) valuation mode; (e) publication outlet and (f) socio-economic characteristics. (2) A cost function model will be applied to estimate the cost of provision of biodiversity and carbon sequestration from the supply side. This model is based on the theory of cost minimisation and joint production of services which considers complementary, substitutive and competitive relationships among ecosystem services. We hypothesize in this study that the forest owner is a firm, maximising profits and providing several marketed and non-marketed outputs at a micro level. We will conduct a field survey on the cost of forest management characteristics (forest management plan, site preparation, planting, harvesting, and labour) as fixed and variable costs. These costs are considered as dependent variables and functions of independent variables (input and output vectors): physical characteristics (forest type, age, size, conditions), spatial characteristics (location and distance attributes, type of ecosystem services provided in the area) socio-economic characterics of forest owners (ownership type, age, sex, income, education) as inputs variables and the output variables as ecosystem services provided (selected indicators of biodiversity  and carbon sequestrated). We estimate the cost model based on the input and output relationships of these variables outlined above. (3) Using the Land Use Management Support System (LUMASS) model for land-use change modelling and pattern optimisation on incomes from forest farms, water quality and carbon stock. LUMASS is implemented in Arc Map Environment. Our expected results will contribute to new economic valuation methods for ecosystem services and the designing of sustainable forest ecosystem services policies and sustainability assessments.

Key words: forest ecosystem services, cost function model, meta-analysis, LUMASS


Poster January 2013

last modified 2013-02-28