Transcript Part IV. Renewable Resources A. Fish C. Water D. Biodiversity

Part IV. Renewable Resources
A. Fish
B. Forests – temperate
C. Water
D. Biodiversity
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A. Temperate Forests
Chapter 12
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Forest Ecology
• Temperate forests – in North America are found north of
the Tropic of Capricorn and south of the Tropic of Cancer.
• The forest is more than a collection of trees.
• It is a collection of plant, animal, bacterial, and fungal
organisms that interact with the physical environment and
with one another.
• A forest is an example of a climax community.
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Climax community
• Defined – an ecosystem that has arisen out of competition
with other communities of organisms.
• An area of land may be first populated by grassland, then
small woody plants, then fast growing trees, and finally
slower growing trees, such as oak and maple.
• The process of soil formation and nutrient cycling is a
good example of how organisms interact with the physical
environment.
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Nutrient cycling
• Process by which the basic life nutrients (P, K, and N) are
absorbed from the physical environment by various
organisms in the ecosystem, transferred from organism to
organism, and eventually returned to the soil.
• As Figure 12.1 illustrates, nutrients in soils are absorbed
by roots of trees and other plants.
• These nutrients return when plants die and decay, when
animals eat plants and their waste is returned to soil and
when other animals eat these animals and waste is returned
to the soil.
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Carbon sequestering
& water absorption
• Forests play an essential role in carbon cycling when they remove CO2
from the atmosphere and sequester it in their woody tissue.
• Carbon is then available to other organisms who consume the tree.
• Forests also play an important part in the hydrological cycle.
• Leaves of the forest slow the velocity of the rain, allowing a slow
trickle of water to organic matter below.
• The result is more water absorbed by the soil, more water reaching
underground aquifers and less soil erosion due to run-off.
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Ecological services
• In addition to the forests’ contribution discussed above,
forests are important to flood protection, biodiversity, soil
formation, and erosion control, carbon sequestration.
(lumber argument?)
• Forests also provide important aesthetic and recreational
benefits and production activities.
• Productive activities include harvesting animals,
mushrooms, berries, mining and grazing of livestock and
the harvesting of wood.
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The Privately & Socially Optimal
Management of Forests
•
Optimal management of forests is ultimately linked to the
type of ownership.
•
Forest ownership can be divided into 3 primary
categories:
1. Forests owned by households
2. Forests owned by firms in the forest industry
3. Publicly owned forests.
1.
Difficult to identify a single management strategy for 1st
type, HH owned forests. Strategies vary by owner and
can take the form of profit maximization, utility
maximization or a combination of both.
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2. Forest product industry
• These firms, which include Boise-Cascade,
Weyerhaeuser, and Georgia-Pacific, seek to
maximize the present value of earnings
derived from the forest.
• In addition to harvesting timber from their
own land, these firms also lease harvesting
rights on both private and public lands.
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3. Publicly owned forests
• Include national parks, national forests, and state
and local parks and forests, as well as publicly
owned tracts of forests, wildlife refuges, game
management areas, and nature preserves.
• Generally these publicly owned forests are
managed for multiple uses and not just the
generation of income from timber harvesting.
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Maximizing the Physical Quantities of
Harvested Wood
• There are 2 basic methods for maximizing the physical
quantity of wood derived from the forest.
1. Peak volume – letting the forest grow until it reaches its
peak volume and then cutting it. The forest is then
replanted, and the process is allowed to repeat itself.
2. Rotation of forest – chooses the length of the harvestreplant-harvest cycle to maximize the total harvests of
wood that can be achieved over time. The length of the
rotation cycle is chosen to maximize the flow of wood.
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Growth
• The length of time in the rotation for either of these 2 strategies is
critically dependent upon the way in which trees grow.
• The growth of trees is dependent on the density of the stand of trees,
the soil condition, weather and rainfall, and the incidence of disease
and pests.
• It is important to consider growth of the stand of trees and not the
individual trees.
• After replanting, the trees initially grow at a rapid rate, but the mass of
wood is relatively small.
• As trees mature growth eventually slows.
• Growth can become negative as disease and death associated with
aging has a greater impact.
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As illustrated in Table 12.1, Figure 12.2a, and Figure 12.2b,
growth of a hypothetical stand of trees can be expressed as a
function of the age of the trees in the stand.
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Optimal time to harvest?
• It is not as easy to see when the total amount of wood that is harvested
over time is maximized – tradeoffs
• One way to increase the flow of wood is to harvest more frequently.
• However, the more frequently you harvest, the younger and smaller the
trees.
• The alternative is to harvest less frequently and have bigger harvests.
• The optimal time to harvest is at the age that maximizes the average
growth (MAI) of the tree over its lifetime.
• If average growth is maximized over a sequence of multiple rotations,
then total growth will be maximized as well.
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Max quantity –
an efficient policy?
• Inefficient. The costs and benefits
associated with different quantity levels
have not been incorporated
• Must consider costs and benefits of making
rotation longer or shorter
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The Optimal Rotation
• The choice of optimal rotation is conceptually
very simple. The forest manager must ask “Are
the benefits of making a rotation a year longer (or
a year shorter) > the costs?”
• The complexity is in determining the costs and
benefits and evaluating then over time.
• Figure 12.3 illustrates the time paths of benefits
and costs from timbering.
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• Start with newly planted trees. Revenue is generated at harvest
and is referred to as stumpage value.
• Then the costs: include planting, maintenance such as disease
control, fire prevention, thinning, pruning and removal of
deadwood and pest control.
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The Optimal Rotation
• Benefits come at a set of intervals, costs at
another
• The forest manager's job is to maximize the
PV of this stream of costs and benefits by
deciding the optimal rotation length.
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Costs
•
The costs of letting trees grow for another year
include both:
1. Out-of-pocket costs – Disease prevention, thinning,
fire prevention and control of pests
2. Opportunity costs – Based on foregone income plus 2
other categories: interest income and potential rent
•
•
Interest income (rV) is income that would have
been earned if trees had been harvested, sold,
and the money invested
Potential rent/opp cost of land (OCL) is
associated with trees being harvested and the
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land rented.
Costs and benefits
• Assume out-of-pocket expenses are 0 (just include opp
costs). Implies that periodic cutting efficient.
• If out-of-pocket expenses are sufficiently high, then it is
possible that the forest should never be cut.
• Benefits of allowing the trees to grow (waiting) come from
the possibility of greater quantities of wood to sell –
critically dependent on the shape of the marginal growth
(annual increment) function of the trees.
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The Optimal Rotation
• The additional revenue associated with increasing the
length of rotation is represented by DV/Dt , change in
revenue if wait 1 more year.
• The stumpage value function reaches its maximum when
DV/Dt=0, that is when lengthening the rotation has no
impact upon stumpage value.
• The opp cost of land: function OCL. This is the interest
that could be earned from the sale of land. (= annual rent
that could be earned)
• The max value for OCL will occur when rotation is at its
optimal length. Here the forest will be most valuable.
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The Optimal Rotation
• When rV + OCL (the sum of the two opportunity costs) =
marginal benefits of changing rotation length (DV/Dt), the
PV of the whole future stream of harvests is maximized.
• Any external changes that shift DV/Dt upward will,
ceterus paribus, lengthen the optimal rotation.
• Likewise, any external changes that shift either rV or OCL
upwards will, ceterus paribus, shorten optimal rotation.
• An example would be an increase in the price of timber
that would increase the stumpage value (V), which would
increase DV/Dt and increase rV and OCL.
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An increase in DV/Dt lengthens the rotation while an increase in
rV and OCL shortens the rotation.
Which effect dominates depends upon the interest rate.
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The Optimal Rotation
• One shortcoming of the optimal rotation model is the
failure to include benefits associated with standing forests,
which includes watershed protection, wildlife habitat, and
recreation and so on.
• Bowes and Krutilla point out in their study that
relationships between the length of the harvest rotation and
non-harvest benefits are likely to be irregular, illustrated by
the multi-peaked function in Figure 12.4.
• Figure 12.6 illustrates the optimal rotation when nonharvested benefits are considered.
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The maximum of the total benefits function is to the right of the
maximum of the timber harvested function, implying that
considering non-harvested benefits will lengthen optimal
rotation.
If non-harvest benefits are large enough, the optimal harvest
rotation may be to never harvest.
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The Optimal Rotation
• Both harvested and non-harvested benefits from a particular stand of
forest are dependent on the quantity and quality of other forest stands.
• The price of timber is determined by the quantity and quality of other
forest stands.
• Elimination of non-harvest benefits by harvesting may have an impact
upon non-harvest benefits of other forest stands.
• Clear cutting scars the landscape and reduces the recreational value of
remaining landscape.
• The degree of forest fragmentation caused by harvesting is extremely
important to species habitat and biological diversity.
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Multiple Use Management
• The Multiple Use Sustained Yield Act (MUSYA)
of 1960 specifically charges the U.S. Forest
Service with managing to promote benefits from
both timber and non-harvest benefits.
• One set of uses of forest specified by the MUSYA
includes those that generate revenue for forest
service such as timber, grazing, mineral and
energy mining, and fee recreation.
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Multiple Use Management
• Grazing is possible because a forest is generally
defined as an area in which at least 10% of land
area is covered by a canopy of trees.
• Approximately 100 million acres of national forest
land is currently available for ranchers, of which
50% is suitable of grazing.
• Bowes and Krutilla charge that the payment made
for use of this land is below market price.
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Multiple Use Management
• An alternative set of uses for the forest resource does not
generate revenues and is often called nonmarket use.
• These include OA (unpriced) recreation, watershed
maintenance, wilderness, and fish and wildlife value.
• Not only do market and nonmarket uses conflict but also
many nonmarket uses conflict with one another.
• Too many recreationists can lead to environmental
degradation which leads to a decline in wildlife numbers
and diminished watershed attributes.
• Hikers conflict with trail bikers or skiers with
snowmobiles.
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Comparative advantage
• When applied to forests, the theory of comparative
advantage argues that even though some of the
best wood in the world can be produced from old
growth red wood, spruce, fir and sequoia forests in
the Pacific Northwest, the comparative advantage
of these forests is in the production of ecological
services, aesthetic benefits and recreational
opportunities.
• Can substitute wood, cannot substitute ecological
services.
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Below-Cost Timber Sales
• Many critics of U.S. Forest Service policy feel that
management has been slanted towards timber
production.
• In the late 1970s, the National Resources Defense
Council focused on the existence of below cost
timber sales (sales of timbering rights on public
land, where revenues do not cover the timber
related forest management expenses) and the
inefficiencies that they create, including
depressing the profitability of privately owned
forests.
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Proper use
• A general guideline for proper use of public forest land is
that a forest should be used for timbering if the PV of the
net benefits (net of all management costs) of all multiple
uses is > it would be without timbering.
• The cost of road building is often not included in this
analysis because it is viewed as a benefit to multiple uses.
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Costs of roads
• The problem is that the quantity of roads necessary for
harvest of timber may be > that optimal for recreational
use, and as a result may cause environmental degradation.
• In addition, building these roads precludes the designation
of the forest as a wilderness area.
• The cost of the roads is viewed as sunk by the Forest
Service and is not linked to the acceptance of bids for use
of the forest land.
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Excess harvesting
• Figure 12.7 illustrates the excess harvesting which will
result when the full costs associated with use of the timber
resource are not reflected in the decision to harvest.
• M1 represents the square miles harvested when the
timbering firm does not recognize the cost of road building
or the other opportunity costs.
• As additional costs are added to the MPC, the optimal
quantity of timber harvested falls.
• Timbering companies choose too to harvest TOO MUCH
since true costs not included
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Special case: optimal harvest 0
• Figure 12.8 illustrates a special case where failure
to recognize the full costs of harvesting timber can
lead to inefficient harvests.
• By comparing MR to MPC plus additional
external costs it is possible to see that the optimal
level of harvest is zero.
• Failure to incorporate the other costs would result
in a positive level of harvest.
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Panel A: MSC lies entirely above MR – optimal harvest 0.
Panel B: When include foregone benefits from other uses (recreation,
wildlife, watershed protection), MSC again lies entirely above MR –
optimal harvest 0.
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Ancient Growth Forests
• In the US, the only remaining old growth forests
are in the Pacific Northwest and Alaska.
• Old growth or ancient forests are forests that have
never been logged and therefore, are in their
original state.
• From an ecological perspective, replanted forests
are a poor substitute for an old growth forest.
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Ancient Growth Forests
• Huge trees shape the ecosystem within which they live.
• Standing trees serve as homes for many species.
• Falling trees clear a swatch through the forest, open up the
floor of forest to sunlight, and promote growth of plants.
Provide homes for animals.
• Deadwood provides nutrients for new generations of trees.
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Owls or jobs?
• Jobs issue often used to justify subsidizing harvesting of
forests
• Actually, this process involves a net loss for society as a
whole, because it costs as much as $3 of gov’t expenditure
for every $1 timbering job wage created
• In some cases, timbering may even destroy more jobs than
it creates – ecological damages (downstream, erosion –
affects salmon fishers, etc.)
• Additionally, subsidization lowers market price of wood,
adversely affecting employment in privately harvested
areas.
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Ancient Growth Forests
• In addition to the direct monetary costs of timbering old
growth forests, there are also the costs to society of the loss
of the ancient forests.
• These costs are likely to be high, since the amount of
ancient forests has shrunk so drastically in recent years.
• See box 12.1 – measuring the value of spotted owls
• Benefit of preserving owls represents huge Pareto
improvement – appropriate policy may be to compensate
those in timber industry who lose from preservation
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Summary
• Since the forest is the only source of economic activity in many remote
rural areas, it is often felt that the forest must be harvested to provide
jobs to support the region's population.
• There are COSTS associated with “saving” jobs in the timber industry.
• These include the inefficiency associated with road building, the
potential loss of species, for instance the decline in salmon fishing due
to destruction of streams.
• As fewer and fewer old growth forests remain, the cost associated with
clear cutting these forests rise.
• The value of the last of any species is very great.
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