Issue no. 13 - Autumn 2016





Managing our forests under threat of tree pests and diseases: a bioeconomic modelling approach

by Morag Macpherson, University of Stirling, UK

The threat to UK forests from invasive pests and pathogens is increasing at an alarming rate. In our project, FOREMOD, we aim to build a series of bioeconomic models, which combine the ecological, epidemiological and economic drivers of a forest, to study the ways in which different management options can reduce risks and expected damages from a range of forest diseases. Key questions and results that we have addressed so far include:

  • How does the disease change the optimal rotation length of a production forest? The optimal rotation length, which maximises the net present value of the forest, is reduced when timber from infected trees has no value; but when the infection spreads quickly, and the value of timber from infected trees is non-zero, it can be optimal to wait until the disease-free optimal rotation length to harvest. [1]
  • How does a payment for multiple forest benefits alters the effect of disease on optimal forest rotation length? When our optimal rotation length model is extended to include the non-timber benefit (such as biodiversity and carbon), we find that the payment counteracts the negative economic effect of disease by increasing the optimal rotation length. [2]
  • What is the effect of pests and pathogens on strategies for forest diversification? Diversifying the species composition can reduce the loss from disease even when the benefit from the resistant species is small. We find that diversifying the species composition can reduce the loss from disease even when the benefit from the resistant species is small. However this result is sensitive to a pathogen's characteristics (probability of arrival, time of arrival, rate of spread of infection) and the losses (damage of the disease to the susceptible species and reduced benefit of planting the resistant species). [3]
  • How does uncertainty in the future spread of disease alter the optimal timing of applying a control? Future uncertainty can delay the timing of treatment, with greater uncertainty leading to treatment being deployed later. This work has been extended to incorporate both timber and non-timber benefits so as to investigate how forest management objective affects the timing of control adoption, given that there is uncertainty in the future spread of infection. Results show that the threshold level of infection at which a forest manager who only values timber benefits, varies to that of a forest manager who values only non-timber benefits. [4]
  • Public Preferences and Willingness to Pay for Forest Disease Control in the UK. We ran a choice experiment that aims to understand the views of the public about different disease control methods and options for funding such controls. We find a negative sentiment against some disease control measures, such as clear felling of a forest, and chemical or biocide spraying. Moreover, we find that there is significant public support for part-financing forest disease control policies in the UK, but that this is conditional on forest ownership and the type of control measures used. [5].


[1] Macpherson, M.F., Kleczkowski, A., Healey, J.R., and Hanley, N. (2016) The effects of disease on optimal forest rotation: a generalisable analytical framework Environmental and Resource Economics pp1-24 DOI:10.1007/s10640-016-0077-4)
[2] Macpherson, M.F., Kleczkowski, A., Healey, J.R., and Hanley, N. Payment for Multiple Forest Benefits Alters the Effect of Tree Disease on Optimal Forest Rotation Length (Submitted; working paper)
[3] Macpherson, M.F., Kleczkowski, A., Healey, J.R., Quine, C., and Hanley, N. The Effects of Invasive Pests and Diseases on Strategies for Forest Diversification (submitted; working paper)
[4] Dangerfield, C.E., Whalley, A.E., Hanley, N., and Gilligan, C.A. What a Difference a Stochastic Process Makes: Epidemiological-Based Real Options Models of Optimal Treatment of Disease (Submitted; working paper)
[5] Sheremet, O., Healey, J.R., Quine, C.P., and Hanley, N. (2016) Public Preferences and Willingness to Pay for Forest Disease Control in the UK Accepted to Jnl Ag Econ.


To find out more about project you can visit, contact Morag (, or follow us on Twitter @ForestModelling.

The FOREMOD project is one of seven projects in phase 2 of the Tree Health and Plant Biosecurity Initiative funded by BBSRC, Defra (with support of the Welsh Government), ESRC, Forestry Commission, NERC and the Scottish Government. The project started in June 2014 and runs for three years.

Project team members are: Prof. Adam Kleczkowski University of Stirling), Prof. Chris Gilligan (University of Cambridge), Prof. Nick Hanley (University of St. Andrews), Prof. John Healey (Bangor University), Dr. Elizabeth Whalley (University of Warwick), Dr. Chris Quine (Forest Research), Dr. Morag Macpherson (University of Stirling), Dr. Ciara Dangerfield (University of Cambridge), Oleg Sheremet (University of St. Andrews) and Dr. Steven Hendry (Forest Research).


From the Partners


5th Workshop on Age-structured models in Natural Resource Economics
Genueser Schiff, Lütjenburg, Germany, 17-19 May 2017

Martin Quaas, Anders Skonhoft, Olli Tahvonen and Niels Vestergaard are organising the Workshop. Both theoretical and empirical studies are welcome that integrate state-of-the-art ecological models and economics in fisheries, forestry and related fields. Examples of interesting questions include age- and size structured models, models with spatial structure, economic models with biological evolution and questions related to numerical computation of complex optimization models.

> Download the Call for papers

UNEP session on “Macroeconomics Policies and Ecosystem Services” at the first Africa ESP Conference
Nairobi, Kenya, 21 – 25 November 2016

The objectives of Ecosystem Services Economics Unit session at the 2016 African ESP Conference were to explore the role of natural capital in the decision making, particularly at a national macroeconomic level. Specifically, the session wanted to understand the linkages of natural capital with macroeconomic policies; explore what the data and capacity needs at national level are and discuss the knowledge gaps and future priority of research.

> Read the session briefing



Upper-Rhine Cluster for Sustainability Research

Six universities in the German-French-Swiss Upper-Rhine region have joined forces to form a cross-border and interdisciplinary research cluster for sustainability research. This includes BIOECON’s partner University of Freiburg, Germany. Altogether, the cluster comprises more than 60 researchers and aims at becoming a center for sustainability research of European significance. Biodiversity and ecosystem services, as well as economic analyses of environmental governance, are among the thematic research foci.

> More information


ProEcoServ pilot project achieves spectacular results

The UNEP Project for Ecosystem Services (ProEcoServ) funded by the Global Environment Facility to the tune of nearly $6.3 million set out to find ways to integrate the findings and tools of ecosystem service assessments into policy and decision-making in four pilot countries – Chile, South Africa, Trinidad and Tobago and Viet Nam. Following recommendations by the Millennium Ecosystems Assessment, ProEcoServ sought to better integrate ecosystem assessment, and develop scenarios and economic valuation of ecosystem services to ensure national sustainable development planning. The programme studied grass and drylands, forests, coastal and marine ecosystems at different scales, ranging from site specific, catchment, provincial, national, to transboundary scale. ProEcoServ focused on national assessments, with the close involvement of national and local stakeholders.

> More information on ProEcoServ
> Download final report


The Ecosystem services' assessment in the Israeli Mediterranean project

The marine environment constitutes an asset of natural capital and benefits enjoyed by humanity. This project is the first of a kind for Israel and assesses these benefits, often referred to as “ecosystem services”, in the territorial and economic waters of the Israeli Mediterranean Sea. An economical valuation is provided by employing spatial analysis tools alongside economic valuation methods of the different ecosystem services, hence underlying critical areas of benefit supply. In addition, by incorporating different scenarios into the analysis (e.g. environmental changes and marine resources exploitation), the future flow of marine ecosystem services can be examined. The final outcome of the project will consist of an encompassing economic valuation of the diverse benefits given by our marine ecosystems. Project partners include: Natural Resources and Environmental Research Center (NRERC) of Haifa University and Israel Oceanographic and Limnological Research (IOLR) .

> Contact: Prof. Shamir



Post-doc opportunity at the Yale School of Forestry & Environmental Studies, USA

The successful candidate will contribute to research on coupled ecological-economic systems and capital theoretic approaches to valuing stocks of natural capital. The individual filling this position is expected to collaborate with faculty and to develop original research.  There will also be opportunities to participate in other ongoing research.  Applicants are encouraged to visit for more information about Dr. Fenichel’s ongoing projects.  Positions are expected to last 1-2 years.

> Read more


Selected publications

Irreversibility and uncertainty cause an intergenerational equity-efficiency trade-off
Nikolai Hoberg, Stefan Baumgärtner

Two important policy goals in intergenerational problems are Pareto-efficiency and sustainability, i.e. intergenerational equity. We demonstrate that the pursuit of these goals is subject to an intergenerational equity-efficiency trade-off. Our analysis highlights two salient characteristics of intergenerational problems and policy: (i) temporal irreversibility, i.e. the inability to revise one's past actions; and (ii) uncertainty of future consequences of present actions in human-environment systems. We employ a two-non-overlapping-generations model that combines an intragenerational production decision on the use of circulating capital and a non-renewable resource, with a negative intergenerational externality as an unforeseen contingency. If initially unknown problems become apparent and policy is enacted after irreversible actions were taken, policy-making faces a fundamental trade-off between ex-post Pareto-efficiency and sustainability. That is, one can achieve either one of these two goals, but not both.

> Full article


Land for biodiversity conservation — To buy or borrow?
Oliver Schöttker, Karin Johst , Martin Drechsler, Frank Wätzold

The conservation of endangered species and habitats frequently requires a certain type of land use which, however, leads to opportunity costs compared to profit-maximising land-use. In such a setting biodiversity conservation organisations have two main options: (1) The ‘buy alternative’ where they buy the area of interest and either carry out the necessary land-use measures themselves or hire firms to do so, or (2) the ‘borrow alternative’ where they ‘borrow’ the land for conservation from private landowners who agree to carry out biodiversity-enhancing land-use measures over a certain period while the conservation organisation compensates them for their opportunity costs. Comparing both alternatives raises the question of budget efficiency, i.e. which alternative will lead to a higher level of biodiversity conservation for a given financial resources? In this paper we present a conceptual ecological–economic model, and then apply the model to analyse how changes in ecological and economic parameters influence the relative efficiency performance of the two alternatives.

> Full article


The Devil in the Detail: A Practical Guide on Designing Payments for Environmental Services
Stefanie Engel

Payments for environmental services (PES) have become a popular approach to address environmental degradation. However, evidence on its effectiveness is scarce and rather mixed. PES is not a panacea, but there are many cases where PES can be a promising tool. Yet, poor PES design translates into poor performance of the instrument. PES design is a complex task; the devil is in the detail of a number of PES design features. The purpose of this paper is to provide guidance in dealing with this complexity through a comprehensive review of PES design that is accessible to both academics and practitioners. Practitioner guidelines on deciding whether PES is the best approach and for selecting among alternative design features are presented. PES design has to start from a careful understanding of the specific ecological and socio-economic context. We now know a lot about which design features are best suited to which context. It is time to put these insights into practice.

> Full article


How (not) to Pay - Field Experimental Evidence on the Design of REDD+ Payments
Tim Reutemann, Stefanie Engel, Eliana Pareja

Payments for Ecosystem Services (PES) can use many design features. We investigate the impact of payment conditionality types, i.e. different specifications when to pay and when not to pay, for PES on deforestation and agricultural production in a lab-in-the-field experiment. Our experiment also tests variations in contract period and payment volatility. We designed a highly visual simulation game to characterize the decision situation of a cattle rancher in Brazil. The player can expand extensive pasture by deforestation or intensify existing pasture. The model includes both a land and a capital constraint. We applied the game in an economic, framed lab-in-the-field experiment in Tocantins, Brazil. Payments conditional on forest carbon stock lead to slow, but steady deforestation, while payments conditional on forest carbon stock-change suppressed deforestation more strongly. But payments conditional on stock increase cattle production while payments conditional on stock-change have no effect on production. Thus, depending on the level of leakage, either type of conditionality can be more cost-effective in reducing global carbon emissions. Contracts with limited periods lead to strong deforestation after the end of the payment period. Payment volatility had no significant effect.

> Full article


Deforestation Rate in the Long-run: the Case of Brazil
Luca Di Corato, Michele Moretto, Sergio Vergalli

In this article we study the long-run average rate of forest conversion in Brazil. Deforestation results from the following trade-off: on the one hand, the uncertain value of benefits associated with forest conservation (biodiversity, carbon sequestration and other ecosystem services), on the other hand, the economic profits associated with land development (agriculture, ranching, etc.). We adopt the model by Bulte et al. (2002) as theoretical frame for studying land conversion and then derive, following Di Corato et al. (2013), the associated long-run average rate of forest conversion. We then identify the parameters to be used in our model. The object of our simulation is Brazil and 27 states. Our aim is to compute under several scenarios the time required to develop the remaining forested land in these states. We provide potential future scenarios, in terms of forest coverage, for the next 20, 100 and 200 years. Our results suggest that the uncertainty characterizing forest benefits plays a relevant role in deterring deforestation. We find that these benefits, if growing at a sufficiently high rate, may significantly slow down the conversion process. In contrast, a higher volatility accelerates the process of deforestation. We indicate the Brazilian states where forests are expected to be saturated earlier. In this respect, we find that forestland currently available may be expected to be fully converted within a 200-year horizon.

> Working paper


Characterizing commercial cattle farms in Namibia: Risk, management, and sustainability 
Roland Olbrich, Martin F. Quaas, Stefan Baumgärtner

Commercial cattle farming in semi-arid regions is subject to high rainfall risk. At the same time, it is prone to rangeland degradation. Theoretical works suggest that rainfall risk management by means of financial instruments may stabilize farming-derived income over the short-term, but provides little incentives for conservative rangeland management. Thus, the use of financial strategies of income stabilization may accelerate rangeland degradation over the long term, as opposed to production or organization strategies which may alternatively be used to stabilize farming incomes. In this paper, we provide an empirical characterization of Namibian commercial cattle farming and explore the link between risk, management, and sustainability by examining structural farm patterns with a cluster analysis. Our data comes from a large-scale survey across the Namibian commercial cattle farming area, to which 398 farmers responded. Our results show that the most distinct of the three identified clusters is characterized by high sustainability and low financial risk management, and that it does not differ from the remaining two clusters with respect to income. This suggests an inverse relationship between financial risk management and sustainability, and thus supports theoretical insights.

> Full article


Deconstructing the Reality of Community-Based Management of Marine Resources in a Small Island Context in Indonesia
Philipp Gorris

This study offers a detailed analysis of community-based management (CBM) in a small island in Indonesia. In the study site, area-specific stewardship for a marine territory was informally institutionalized and, in addition to state rules, locally devised rules based on informal agreements have emerged. Using multiple methods for the analysis of the perceptions of the local community, this research examines the actual impact of the different rules on the fishing patterns in that sea territory, and illuminates the rationales of the local population to engage (or not) in the community-based approach to manage the marine resources. The study shows that the CBM initiative has to be seen as part of a convoluted regulatory system that impacts the fishing behavior in the sea territory. A lack of official authority to formally develop and especially to locally enforce rules represents a key challenges for the CBM initiative. This is further complicated by severe coordination problems between the local community and higher level state actors. The study further shows that the motivation of the community members to engage in the enforcement of the informal rules is strongly based on short-term economic considerations. For rules that are perceived to have a strong impact on the individual fishing yields, the fear of potential short-term economic losses constitutes a particular success factor of the local initiative since it motivates the members of the community to enforce local rules, especially when outside fishers break the rules. Yet, if rule-breaking is not perceived to decrease individual fishing yield, or if benefits of the generated yields are shared with the community as a compensation mechanism, the motivation of the community members to engage in rule enforcement ceases.

> Full article


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