Modeling the Marginal Value of Rainforest Losses : A Dynamic Value Function Approach
A rainforest can be modeled as a dynamic asset subject to various risks, including risk of fire. Any small part of the forest can be in one of two states: either untouched by forest fire, or already damaged by fire, in which case there is both a lo...
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| Format: | Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2015/10/25167334/modeling-marginal-value-rainforest-losses-dynamic-value-function-approach http://hdl.handle.net/10986/22876 |
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okr-10986-228762021-04-23T14:04:11Z Modeling the Marginal Value of Rainforest Losses : A Dynamic Value Function Approach Strand, Jon FOSSIL FUEL ECOSYSTEM LANDSCAPE ECOLOGY FOREST FRAGMENTATION ISSUES FIRE RISK NATURAL RESOURCE LAND AREA PRECIPITATION CARBON ILLEGAL LOGGERS TIMBER ENERGY BASELINE” FOREST FOREST AREA STREAMS FOREST EXTRACTION FOREST PRESERVATION CARBON RELEASE CONSERVATION TIMBER HARVESTING LOGGING FOREST VALUATION USE OF FIRE LAND CLEARING CARBON VALUES TIMBER FOREST FOREST FOREST LOSSES GLOBAL CARBON EMISSIONS DEFORESTATION RATE LAND USE DEFORESTED LAND TIMBER VALUE FOREST CHANGE LOSS OF FOREST CLIMATE FORESTS LEAD FOREST CHANGES BIOLOGICAL RESOURCES TIMBER FOREST PRODUCTS CARBON MARKETS PRIMARY FOREST AGRICULTURAL PRODUCTION FOREST AREAS AMAZONIAN LANDSCAPES BIODIVERSITY PROTECTION NEGATIVE IMPACT FOREST BIOME FOREST MANAGEMENT POLICY EXTINCTIONS FOREST COVER FOREST LAND FOREST PATCH FOREST PLOT TROPICAL FOREST ILLEGAL LOGGING WOOD CLIMATE CHANGE BASELINE FOREST LESS DEFORESTATION FOREST FIRES TIMBER PRODUCTS COMMERCIAL LOGGING BENEFITS FOREST FIRE TIMBER VALUES SUSTAINABLE FORESTRY FOREST PRODUCTS HARM BURNT FOREST FOREST SERVICES AGRICULTURE BRAZILIAN AMAZON LAND CARBON EMISSIONS PRICES EMISSIONS FOREST LOSS ECOLOGICAL ECONOMICS RAINFALL BIODIVERSITY FOREST MANAGEMENT FOREST FIRE MODEL FOREST GROWTH WOOD PRODUCTS ECOSYSTEMS ANNUAL PRECIPITATION RAINFOREST RAINFORESTS FOREST FIRE RISK FORESTRY ECOSYSTEM SERVICES LANDSCAPE TIMBER EXTRACTION A rainforest can be modeled as a dynamic asset subject to various risks, including risk of fire. Any small part of the forest can be in one of two states: either untouched by forest fire, or already damaged by fire, in which case there is both a local forest loss and increased dryness over a broader area. In this paper, two Bellman equations are constructed, one for unharmed forest and a second for already burnt forest. The analysis solves the two equations for the total expected asset values in each of the two states, assuming that asset returns have a constant growth rate over time. The equations are used for deriving the marginal value of standing (unburnt) rainforest, equivalent to the expected discounted value loss when losing a small additional forest patch. The paper shows that marginal forest value is increased by the additional dryness and forest fire risk that follow from forest fragmentation when additional forest is lost locally. Both forest fires and dryness here serve as “multipliers” to the basic services return loss, within and outside the forest. The paper also presents a framework for calibrating the impact of the forest fire risk component on forest value. 2015-11-05T19:08:17Z 2015-11-05T19:08:17Z 2015-10 Working Paper http://documents.worldbank.org/curated/en/2015/10/25167334/modeling-marginal-value-rainforest-losses-dynamic-value-function-approach http://hdl.handle.net/10986/22876 English en_US Policy Research Working Paper;No. 7445 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
FOSSIL FUEL ECOSYSTEM LANDSCAPE ECOLOGY FOREST FRAGMENTATION ISSUES FIRE RISK NATURAL RESOURCE LAND AREA PRECIPITATION CARBON ILLEGAL LOGGERS TIMBER ENERGY BASELINE” FOREST FOREST AREA STREAMS FOREST EXTRACTION FOREST PRESERVATION CARBON RELEASE CONSERVATION TIMBER HARVESTING LOGGING FOREST VALUATION USE OF FIRE LAND CLEARING CARBON VALUES TIMBER FOREST FOREST FOREST LOSSES GLOBAL CARBON EMISSIONS DEFORESTATION RATE LAND USE DEFORESTED LAND TIMBER VALUE FOREST CHANGE LOSS OF FOREST CLIMATE FORESTS LEAD FOREST CHANGES BIOLOGICAL RESOURCES TIMBER FOREST PRODUCTS CARBON MARKETS PRIMARY FOREST AGRICULTURAL PRODUCTION FOREST AREAS AMAZONIAN LANDSCAPES BIODIVERSITY PROTECTION NEGATIVE IMPACT FOREST BIOME FOREST MANAGEMENT POLICY EXTINCTIONS FOREST COVER FOREST LAND FOREST PATCH FOREST PLOT TROPICAL FOREST ILLEGAL LOGGING WOOD CLIMATE CHANGE BASELINE FOREST LESS DEFORESTATION FOREST FIRES TIMBER PRODUCTS COMMERCIAL LOGGING BENEFITS FOREST FIRE TIMBER VALUES SUSTAINABLE FORESTRY FOREST PRODUCTS HARM BURNT FOREST FOREST SERVICES AGRICULTURE BRAZILIAN AMAZON LAND CARBON EMISSIONS PRICES EMISSIONS FOREST LOSS ECOLOGICAL ECONOMICS RAINFALL BIODIVERSITY FOREST MANAGEMENT FOREST FIRE MODEL FOREST GROWTH WOOD PRODUCTS ECOSYSTEMS ANNUAL PRECIPITATION RAINFOREST RAINFORESTS FOREST FIRE RISK FORESTRY ECOSYSTEM SERVICES LANDSCAPE TIMBER EXTRACTION |
| spellingShingle |
FOSSIL FUEL ECOSYSTEM LANDSCAPE ECOLOGY FOREST FRAGMENTATION ISSUES FIRE RISK NATURAL RESOURCE LAND AREA PRECIPITATION CARBON ILLEGAL LOGGERS TIMBER ENERGY BASELINE” FOREST FOREST AREA STREAMS FOREST EXTRACTION FOREST PRESERVATION CARBON RELEASE CONSERVATION TIMBER HARVESTING LOGGING FOREST VALUATION USE OF FIRE LAND CLEARING CARBON VALUES TIMBER FOREST FOREST FOREST LOSSES GLOBAL CARBON EMISSIONS DEFORESTATION RATE LAND USE DEFORESTED LAND TIMBER VALUE FOREST CHANGE LOSS OF FOREST CLIMATE FORESTS LEAD FOREST CHANGES BIOLOGICAL RESOURCES TIMBER FOREST PRODUCTS CARBON MARKETS PRIMARY FOREST AGRICULTURAL PRODUCTION FOREST AREAS AMAZONIAN LANDSCAPES BIODIVERSITY PROTECTION NEGATIVE IMPACT FOREST BIOME FOREST MANAGEMENT POLICY EXTINCTIONS FOREST COVER FOREST LAND FOREST PATCH FOREST PLOT TROPICAL FOREST ILLEGAL LOGGING WOOD CLIMATE CHANGE BASELINE FOREST LESS DEFORESTATION FOREST FIRES TIMBER PRODUCTS COMMERCIAL LOGGING BENEFITS FOREST FIRE TIMBER VALUES SUSTAINABLE FORESTRY FOREST PRODUCTS HARM BURNT FOREST FOREST SERVICES AGRICULTURE BRAZILIAN AMAZON LAND CARBON EMISSIONS PRICES EMISSIONS FOREST LOSS ECOLOGICAL ECONOMICS RAINFALL BIODIVERSITY FOREST MANAGEMENT FOREST FIRE MODEL FOREST GROWTH WOOD PRODUCTS ECOSYSTEMS ANNUAL PRECIPITATION RAINFOREST RAINFORESTS FOREST FIRE RISK FORESTRY ECOSYSTEM SERVICES LANDSCAPE TIMBER EXTRACTION Strand, Jon Modeling the Marginal Value of Rainforest Losses : A Dynamic Value Function Approach |
| relation |
Policy Research Working Paper;No. 7445 |
| description |
A rainforest can be modeled as a dynamic
asset subject to various risks, including risk of fire. Any
small part of the forest can be in one of two states: either
untouched by forest fire, or already damaged by fire, in
which case there is both a local forest loss and increased
dryness over a broader area. In this paper, two Bellman
equations are constructed, one for unharmed forest and a
second for already burnt forest. The analysis solves the two
equations for the total expected asset values in each of the
two states, assuming that asset returns have a constant
growth rate over time. The equations are used for deriving
the marginal value of standing (unburnt) rainforest,
equivalent to the expected discounted value loss when losing
a small additional forest patch. The paper shows that
marginal forest value is increased by the additional dryness
and forest fire risk that follow from forest fragmentation
when additional forest is lost locally. Both forest fires
and dryness here serve as “multipliers” to the basic
services return loss, within and outside the forest. The
paper also presents a framework for calibrating the impact
of the forest fire risk component on forest value. |
| format |
Working Paper |
| author |
Strand, Jon |
| author_facet |
Strand, Jon |
| author_sort |
Strand, Jon |
| title |
Modeling the Marginal Value of Rainforest Losses : A Dynamic Value Function Approach |
| title_short |
Modeling the Marginal Value of Rainforest Losses : A Dynamic Value Function Approach |
| title_full |
Modeling the Marginal Value of Rainforest Losses : A Dynamic Value Function Approach |
| title_fullStr |
Modeling the Marginal Value of Rainforest Losses : A Dynamic Value Function Approach |
| title_full_unstemmed |
Modeling the Marginal Value of Rainforest Losses : A Dynamic Value Function Approach |
| title_sort |
modeling the marginal value of rainforest losses : a dynamic value function approach |
| publisher |
World Bank, Washington, DC |
| publishDate |
2015 |
| url |
http://documents.worldbank.org/curated/en/2015/10/25167334/modeling-marginal-value-rainforest-losses-dynamic-value-function-approach http://hdl.handle.net/10986/22876 |
| _version_ |
1764452299279695872 |