Estimating economic value of site quality for uncertain ecosystem service provision in Swedish forests

Figures & data

Figure 1. Conceptual approach for calculating the economic value of site quality in forest.

Table 1. Descriptive statistics.

Variables	N	Mean	Std	Min	Max
${\dot{Y}}_t$: adjusted growth rate^a	195	0.0313	0.0296	−0.143	0.174
Ht: harvest, m^3/ha	196	3.133	1.105	1.191	8.925
$y_t$: standing volume, m^3/ha	196	119.582	31.125	64.493	187.722
Zt.: site quality, m^3/ha	192	5.220	1.966	2.960	8.878
Xt1: scarification, % of productive forest area	192	0.625	0.1913	0.1745	1.1460
Xt2: thinning, % of productive forest area	192	1.278	0.4593	0.5659	2.7775
Xt3: fertilization, % of productive forest area	192	0.3516	0.3106	0.00	1.3244
Var(yt): volatility in standing volume	192	964.195	1171.979	0	4654.217

^a${\dot{Y}}_t=\frac{y_{t+1}-y_t-H_t}{y_t}$, see equation S4 in the Supplementary Material. Std: standard deviation.

Table 2. Regression results from fully modified ordinary least square (FMOLS) of growth rate and variance in forest productivity for Sweden (t-values in brackets).

Variables	Rate of change in forest productivity	Variance in forest productivity
Constant	0.1321***	−436.21***
	(0.0145)	(46.07)
Standing volume per hectare	−2.1031***	14.58***
	(0.2459)	(0.90)
Site quality index (−1)^a	0.0023***	−188.40***
	(0.0028)	(11.79)
Fertilizer (−1)^a	0.0875	−6946.23***
	(0.0986)	(2,402.54)
Policy	−0.0001	−131.19***
	(0.0002)	(19.27)
Thinning (−1)^a	−0.0679	5,821.82***
	(0.0448)	(1,605.30)
Scarificat. (−1)^a	−0.4243***	−1138.42
	(0.0987)	(3,724.22)
Trend	0.0012***	−0.17
	(0.0002)	(1.02)
South Norrland	−0.0076	−309.91***
	(0.0081)	(36.64)
Svealand	−0.0937***	60.58
	(0.0175)	(88.13)
Götaland	−0.1227***	107.12
	(0.0242)	(127.70)
Observations	190	191
R^2	0.22	0.28
Long-run SE	0.0149	0.243
Bandwidth (Newey–West)	14.32	60.57

^aOne-period lag.

Significance level: ***p < 0.01, **p < 0.05, *p < 0.1.

Figure 2. Expected benefits and costs of risk for timber and carbon sequestration at different levels of site quality, SEK/ha.

Table 3. Calculated total economic value and average contribution of a one-unit increment in site quality to the total economic value of timber and carbon sequestration, SEK/ha.

	Economic value:			Contribution of a one-unit increase in site quality index:
	Exp. benefit	Risk	Total	Exp. benefit	Risk	Total
Timber	1127	−59	1068	83	8	91
Carbon sequestration	1589	−118	1471	117	15	132
Total	2716	−177	2539	200	23	223

Figure 3. Economic value of the contribution of increasing site quality by one unit for different prices of timber and carbon sequestration, and risk aversion, SEK/ha. See Table A1 for the data.

Table A1: Calculated total economic value and average contribution of a one-unit increment in site quality to the total economic value of timber and carbon sequestration for changes in prices of timber (P^T), carbon sequestration (P^C), and risk aversion, SEK/ha.

	Economic value;			Contribution of a one unit increase in site quality index;
	Exp. benefit	Risk	Total	Exp. benefit	Risk	Total
P^T=493:
Timber	1543	-111	1432	113	14	127
Carbon seq.	1589	-118	1471	117	15	132
P^C=300:
Timber	1127	-59	1068	83	8	91
Carbon seq.	441	-9	432	32	1	33
Doubling of risk aversion for carbon:
Timber	1127	-59	1068	83	8	91
Carbon seq.	1589	-236	1353	117	30	147
All effects:
Timber	1543	-111	1432	113	14	127
Carbon seq.	441	-18	423	33	2	35

Source: Swedish Forest Data, 2014 report. Department of Forest Resource Management, SLU NB: Norra and Södra Norrland are North and South Norrland, respectively.