ECONOMETRIC ANALYSIS OF FAMILY FOREST OWNERS' FOREST CERTIFICATION PROGRAM PARTICIPATION BEHAVIOR AND OPTIMAL HARVESTING DECISON UNDER UNCERTAINTY
Creamer, Selmin F.
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This dissertation consists of two separate studies. The first is based on the econometric analysis, examining the nonindustrial family forest owners' forest certification program awareness and participation behavior based on the U.S. Forest Service's National Woodland Owner Survey dataset. The forest certification participation behavior of the family forest owners in the Pacific Coast, South Central, and Southeast regions of the United States was examined using a bivariate probit model. During the first step of the analysis, the factors affecting forest certification awareness were established, and in the second step the probability of obtaining forest certification conditional on forest certification awareness was estimated. The results suggested that having received professional advice regarding the forestlands within the last five years, having timber related objectives, and having a written management or stewardship plan were all significant factors influencing the forest owner's participation in forest certification programs. In the second study, the forest owner's decision regarding when to harvest her/his forest and its current worth was analyzed utilizing the real options framework for a representative Douglas-fir stand in the Pacific Northwest, when carbon price was stochastic and there was a risk of fire. The decision making problem was constructed as a linear complementarity problem comparing the forest owner's strategy for postponing the harvest versus harvesting the stand, and was solved using the fully implicit finite difference method combined with a penalty method. The two models - one with and the other without fire risk - were contrasted based on the estimated representative values of the Douglas-fir stand. The incorporation of fire risk into the model resulted in the value of the option (the forest owners receive if they postpone harvesting) and the immediate payoff (the forest owners receive if they harvest immediately) to merge -determining the earliest possible time for harvesting - sooner than the model not accounting for fire risk. With the incorporation of carbon benefits, the value of the option from the forest continued to increase as the stand grew; however as the stand aged and growth declined the increase in value of the options for both models gradually declined as well.