Designing voluntary subsidies for forest owners under imperfect information
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In this paper, we study voluntary subsidies offered to forest owners to increase rotation periods. We assume that a forest owner takes private amenity values into account when making decisions, but these values are lower than the social amenity values; therefore, an amenity value externality arises. Furthermore, the regulator has imperfect information regarding the timber profit of the forest owner. We show that voluntary subsidies must reflect the difference between (a) private and social amenity values and (b) timber profit among the possible types of the forest owner. In this way, we solve the amenity value externality and the problem of imperfect information about timber profit in a second-best optimal way. We have also investigated what happens if the regulator excludes private amenity values when fixing voluntary subsidies and we show that two sources of efficiency losses arise: (a) non-optimal rotation periods and (b) non-truthful revelation of private information.
Originalsprog | Engelsk |
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Tidsskrift | Journal of Forest Economics |
Vol/bind | 37 |
Udgave nummer | 1 |
Sider (fra-til) | 73-101 |
Antal sider | 29 |
ISSN | 1104-6899 |
DOI | |
Status | Udgivet - 2022 |
Bibliografisk note
Funding Information:
This work was supported by the grant BGF 12000457 from the Ministry for Ecological and Inclusive Transition for the project ?Articulating motivations, incentives and institutions to better mobilize forest owners for biodiversity protection? (AMII). UMR BETA is supported by a grant overseen by the French National Research Agency (ANR) as part of the ?Investissements d'Avenir? program (ANR-11-LABX-0002-01, Lab of Excellence ARBRE). Furthermore, the work by Bo Jellesmark Thorsen on this paper was funded by the European Commission through the SINCERE project (H2020 GA 773702 available at https://sincereforests.eu/).
Publisher Copyright:
© 2022 F. Jensen, B. J. Thorsen, J. Abildtrup, J. B. Jacobsen and A. Stenger.
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