Fire, carbon, timber, and trees: Three essays in natural resource economics

This dissertation incorporates various estimation and modeling techniques to investigate important issues in natural resource and environmental economics. All of the empirical examples are tied to forestry, but the techniques used in this research can be applied to many issues in agricultural, environmental, and development economics.; The first essay, Optimal Forest Rotations with Environmental Values and Endogenous Fire Risk, presents an economic model that solves for the optimal economic harvest problem of an even-aged stand when there is a risk of a forest fire and the potential for carbon sequestration benefits. The model incorporates risk-reducing management practices (thinning) that allow risk and growth to be endogenous and is solved using numerical simulation techniques. Results show that higher carbon prices increase the length of rotations regardless of the probability of fire, that there is an increase in management as the stand approaches economic maturity, and that thinning can provide economical and environmental benefits, even when there is a high probability of fire.; The second essay, Estimating the Dynamic Factors of Derived Demand for Regional Softwood Stumpage Markets in the United States, uses two econometric models that can differentiate between short-run and long-run responses to market fluctuations to estimate the elasticities of supply and demand for regional softwood stumpage. This approach is not common in the U.S. timber and wood production literature that often assumes a static equilibrium or instantaneous factor adjustment. Results indicate that elasticities have the potential to fluctuate over time and region, and the differences between short-run and long-run measurements can be large due to the slow adjustment of capital stock.; The third essay, Exchange Rates and the Competitiveness of the United States Timber Sector in a Global Economy, uses a dynamic optimization model of global timber markets to examine how different exchange rates affect global timber supply. A baseline and six alternative scenarios are constructed under the assumption that exchange rates affect the cost structure of harvesting and managing forests. Results indicate that the US forestry sector is sensitive to both strong US {dollar} policies and to weak South American currencies, with the strong dollar policy having the largest effect on domestic supply over the next 50 years.