Forest Economics Introduction Hari Sharma Neupane Sr,. Agriculture Economist M.Sc. MA, PhD
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Forest Economics
Introduction
Hari Sharma Neupane
Sr,. Agriculture Economist
M.Sc. MA, PhD
8/4/2019 Forest Economics_ Introduction
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Aims of course is to:
Improve your knowledge andunderstanding of forest economicsincluding concepts related to forest
policy; forestry business and productmarketing
Understand the interconnections
between forest economics and policies
Apply economic evaluation techniquesto be effective natural resource
managers
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Brainstorming and Basic
concept (overview)What do you mean by economics? (A)
Why we need to know economic theory and principles ?
(B)
What are the major discipline of the economics? (C)
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(A)------Economics is the efficientallocation of resources
and profit/output maximization
-------Very simply: science of choice andfirm
(B)-------Resources are scares, thus ithelps to efficient
use of resources to meet ourchoices/wants
properly
(C)-----
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Economics andDevelopment studies
Adam Smith (1776) – also consideredfirst development economist. His firsttreatise “Wealth of Nation” describedthe systematic study of problems and
processes of economic development inAfrica, Asia and Latin America
Marxist Economics: theory of surplus
value and socialist economics-centralized economy
Recent developments in theories of
poverty trap, role of institution
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Traditional Economics: efficient andleast cost allocation of scarce productive
resources and optimal growth of theseresources over time for ever expandingrange of goods and services, advance
capitalist world of perfect market;consumer sovereignty, automatic priceadjustment, marginal cost and marginalprofit, economic rationality
Political economy: goes beyondtraditional economics with role of socialand institutional processes; influence of
elite and political institution in scarce
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Concept and Scope of Naturalresource economics
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Concept and Scope of Naturalresource economics
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NR economics is the study of theallocation of scarce natural resourcesand environmental services/facilities
Must maintain a societal perspective.Most natural resource questionscannot be adequately addressed if
viewed from the standpoint of anindividual or single firm
Study of natural resources must
consider allocation of resources over
Concept and Scope of Naturalresource economics
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NR Economics draws heavily on threeother economic fields
Micro Theory – efficient production fromresources at a point in time
Capital Theory – NR economics parallelsthe dynamic study of investment andgrowth of stocks of capital theory
Welfare Economics – the allocation of goods and services within a society(ownership, equity, and distribution)
NR issues are multi-disciplinary in natureand potential for long term decision
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Aspects to resourceproblems
Physical – what is technically possible?(depends on supply of resources andproduction possibilities or state of
technology)
Institutional – what is sociallyacceptable? (determined by laws,
customs and values of society)
Economic – Which options areeconomically efficient or optimal?
These elements are d namic- chan es
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Forest Economics There is debate on definition, however
resource economics is considered as abranch of development economics
FOREST economics is the application of
economic principles to a wide range of subjects
management of the various forest
resources through the processing,marketing and consumption of forestproducts
outdoor recreation economics and forest
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Forest resource: nineunique featuresExtensive, visible and "open"
resources
Renewable resources
Production capacity : need to waitand living growth
Multiple use
Forests are both ecosystems andproduction systems
Product and benefit multiplicity
Geo ra hical and biolo ical
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Figure : Classification of forest and tree products
(modification based on FAO NWFP Progam and deGroot et al 2002
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Forest Resources :Introduction
Forest Growth and the Harvesting Problem
1. Supply from Private Forests
• Determination of rent and land use decision
• Comparative dynamics of the harvesting decision
• Total Timber supply.
2. Public Policy Toward Forests
• Forest supply from public, private and community
forests;
• Managing for conservation
• Benefits from standing forest services
3.Deforestation
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Forest Resources :Introduction
Simple Forest Harvesting Problem
Notation and Assumptions
Harvest Rule
Average Annual Timber SupplyHarvesting and Replanting
Optimal Harvest Rule with Replantingand Re-harvesting
The Land Use Decision andDeterminants
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Forest Resources:Introduction
Service Flow from a Standing Forest
Optimal Harvest Age when ServiceFlow
Conservation Forestry approach
Deforestation
Policy Challenges: global and national,B/C ratio, NPV
Climate change
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Thanks
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