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Economics of Multifunctional Forestry in the Sámi People Homeland Region

Author

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  • Parkatti, Vesa-Pekka
  • Tahvonen, Olli
Abstract
We study forestry in the Sámi people homeland region to understand an ongoing conflict between conventional forest logging and maintaining forests as reindeer pastures for indigenous people. We use a detailed model that simultaneously includes timber production, carbon storage in living biomass, deadwood and wood products, negative effects on reindeer husbandry, and a flexible optimization between rotation forestry (cf. clearcuts) and forestry that maintains continuous forest cover. We show that the profitability of conventional forestry is based on utilizing existing forest stands, an outcome that can be understood as forest capital mining. By varying the carbon price between €0 tCO2 and €40 tCO2, we show that the optimal solutions based on a 3% interest rate are always continuous cover forestry. A carbon price of €60 - €100tCO2 implies that it is optimal to give up timber production and utilize forests for carbon storage and reindeer pasture only. Given the present forest management practices and an old-growth forest as the initial state, the carbon choke price decreases to €14–€20 CO2. The optimal choice between timber production and utilizing forests purely for carbon storage and reindeer husbandry may depend on the initial forest state. The choice between maintaining old-growth forest and converting land to timber production, as determined by dynamic economic analysis, is incompatible with the frequently applied approach based on carbon debt and the carbon payback period.

Suggested Citation

  • Parkatti, Vesa-Pekka & Tahvonen, Olli, 2020. "Economics of Multifunctional Forestry in the Sámi People Homeland Region," FACTS: Firms And Cities Towards Sustainability 308021, Fondazione Eni Enrico Mattei (FEEM) > FACTS: Firms And Cities Towards Sustainability.
    • Handle: RePEc:ags:feemff:308021
    DOI: 10.22004/ag.econ.308021
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    References listed on IDEAS

    as
    1. Tahvonen, Olli & Kumpula, Jouko & Pekkarinen, Antti-Juhani, 2014. "Optimal harvesting of an age-structured, two-sex herbivore–plant system," Ecological Modelling, Elsevier, vol. 272(C), pages 348-361.
    2. Jay R Malcolm & Bjart Holtsmark & Paul W Piascik, 2020. "Forest harvesting and the carbon debt in boreal east-central Canada," Climatic Change, Springer, vol. 161(3), pages 433-449, August.
    3. Parkatti, Vesa-Pekka & Assmuth, Aino & Rämö, Janne & Tahvonen, Olli, 2019. "Economics of boreal conifer species in continuous cover and rotation forestry," Forest Policy and Economics, Elsevier, vol. 100(C), pages 55-67.
    4. Samuelson, Paul A, 1976. "Economics of Forestry in an Evolving Society," Economic Inquiry, Western Economic Association International, vol. 14(4), pages 466-492, December.
    5. Bostedt, Göran & Lundgren, Tommy, 2010. "Accounting for cultural heritage -- A theoretical and empirical exploration with focus on Swedish reindeer husbandry," Ecological Economics, Elsevier, vol. 69(3), pages 651-657, January.
    6. Olli Tahvonen, 2015. "Economics of Naturally Regenerating, Heterogeneous Forests," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(2), pages 309-337.
    7. Sinha, Ankur & Rämö, Janne & Malo, Pekka & Kallio, Markku & Tahvonen, Olli, 2017. "Optimal management of naturally regenerating uneven-aged forests," European Journal of Operational Research, Elsevier, vol. 256(3), pages 886-900.
    8. repec:elg:eechap:14605_8 is not listed on IDEAS
    9. Hartman, Richard, 1976. "The Harvesting Decision When a Standing Forest Has Value," Economic Inquiry, Western Economic Association International, vol. 14(1), pages 52-58, March.
    10. Peter Parks & Göran Bostedt & Bengt Kriström, 2002. "An Integrated System for Management and Policy Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(3), pages 203-220, March.
    11. Pekkarinen, Antti-Juhani & Kumpula, Jouko & Tahvonen, Olli, 2015. "Reindeer management and winter pastures in the presence of supplementary feeding and government subsidies," Ecological Modelling, Elsevier, vol. 312(C), pages 256-271.
    12. G. Cornelis van Kooten & Clark S. Binkley & Gregg Delcourt, 1995. "Effect of Carbon Taxes and Subsidies on Optimal Forest Rotation Age and Supply of Carbon Services," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 365-374.
    13. Strang, William J, 1983. "On the Optimal Forest Harvesting Decision," Economic Inquiry, Western Economic Association International, vol. 21(4), pages 576-583, October.
    14. Tahvonen, Olli & Rautiainen, Aapo, 2017. "Economics of forest carbon storage and the additionality principle," Resource and Energy Economics, Elsevier, vol. 50(C), pages 124-134.
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    More about this item

    Keywords

    Community/Rural/Urban Development;

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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