Environmental Valuation & Cost-Benefit News

Abstract: The simplicity of many bioeconomic models has been criticised several times, due to their lack of realism resulting from a deterministic nature and a single-species focus. In this context it was interesting to test the financial sensitivity of bioeconomic modelling against fairly well documented ecological effects in mixed forests. For this purpose our study linked existing results of ecological research with bioeconomic modelling. The presented methodological approach could not only show the importance of considering ecological effects in bioeconomic models; it in fact enabled prioritising ecological research from a financial point of view.

In a first step, the possible influence of the tree species mixture on forest stand resistance, productivity and timber quality was derived from existing studies. In a second step, the available Monte Carlo simulations for Norway spruce (Picea abies [L.] Karst.) and European beech (Fagus sylvatica L.), simulated under site conditions and risks typical of southern Germany, were extended by the mentioned ecological effects and then evaluated from a financial perspective.

The results showed a clear influence of all tested ecological effects on the financial indicators, financial risk and return. While testing each ecological effect separately, an increased resistance against wind, snow and insect attacks had the greatest influence on financial risk and return. It over-proportionally enhanced the financial return while simultaneously the financial risk was reduced. In contrast, a degraded timber quality could eliminate the positive effect of risk compensation in mixed forests almost completely. The least influence on the financial indicators finally showed a changed volume growth in mixed forests.

A combination of the separately tested ecological effects (increased resistance, changed volume growth and decreased timber quality), between both tree species, underlined the dominating importance of the stand resistance. The integration of ecological effects, induced by interdependent tree species, in our bioeconomic model resulted in significantly lower financial risk than ignoring these effects. Moreover, the financial return of mixed stand variants with a proportion of Norway spruce greater than 60% even exceeded that of the most profitable pure stand.

In conclusion this paper clearly confirmed that ignoring ecological effects in bioeconomic models could lead to seriously biased financial results. While a changed volume growth proved rather to be of minor importance for European beech/Norway spruce stands, tree resistance and timber quality may change the financial results significantly.

Keywords: Mixing tree species; Ecological interdependence; Risk compensation; Ecosystem resistance; Volume growth; Timber quality; Financial modelling; Profitability

by Thomas Knoke 1 and Thomas Seifert 2
1. Institute of Forest Management, Center of Life and Food Science Weihenstephan, Technische Universität München, Am Hochanger 13, 85354 Freising, Germany; Telephone: +49 8161 714700; fax: +49 8161 714616.
2. Chair of Forest Yield Science, Center of Life and Food Science Weihenstephan, Technische Universität München, Am Hochanger 13, 85354 Freising, Germany

Ecological Modelling via Elsevier Science Direct www.ScienceDirect.com
Volume 210, Issue 4, 10 February 2008, Pages 487-498
http://dx.doi.org/10.1016/j.ecolmodel.2007.08.011