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INRA
24, chemin de Borde Rouge –Auzeville – CS52627
31326 Castanet Tolosan CEDEX - France

Dernière mise à jour : Mai 2018

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Bureau for Economic Theory and Applications

Laboratoire d'Economie Forestière

Risk, insurance, climate change and forest adaptation

Summary

The studies of this topic initially dealt with the prevention and insurance of natural hazards in forestry, and they have gradually opened up to the question of the adaptation of forests to climate change, and ambiguity (decision under uncertainty).

Researches have focused on risk and ambiguity behavior of forest owners and the insurance and self-insurance of natural hazards in the forest, especially fire and storm. They led to the development of theoretical insurance models under risk and ambiguity which were then tested via experimental economics.

Researches on the adaptation of forests to the CC are more oriented towards the economic cost of adaptation for forest owners. This involves assessing the financial losses associated with the implementation of an adaptation strategy, such as reducing the rotation length, species change, etc. The methodology used to address these themes comes from forest economics. An original reflection was also made on the species mix via the theory of portfolio selection.

Person in charge of the project: Marielle Brunette

Other researchers: Géraldine Bocquého, Antoine Leblois, Antonello Lobianco

Results

The work carried out on this theme has revealed that French private forest owners are risk and ambiguity averse, and that in the face of ambiguity their demand for insurance and prevention is higher. Recent work has also made it possible to quantify their relative risk aversion coefficient and shows that it is close to 1. A number of determinants of the demand for insurance have also been identified, such as different types of public programs, ambiguity (uncertainty) about the probability of occurrence of the hazard, the owner's income or his level of education. Finally, recent work shows that insurance can be an interesting vehicle to encourage forest owners to adapt their practices in the presence of ambiguity (Brunette, Couture and Pannequin, 2017).

The studies on adapting forests to climate change involve identifying the conditions under which it may be economically acceptable for the owner to adapt. For example, it has been shown that changing forest species may be a relevant adaptation strategy for the owner, and that the outcome depends largely on the impact of climate change (in terms of mortality) on the current species (Brunette, Costa and Lecocq, 2014). Similarly, another work compares different strategies for controlling two forest pathogens and shows that often the forest owner has an economic interest in adapting (Brunette and Caurla, 2016). Finally, the species mix was analyzed via the development of a portfolio management simulator, which enabled the identification of the optimal composition by French forest department. The discrepancy with the current composition makes it possible to identify avenues of adaptation for the future.

Several literature reviews related to this theme are also underway:

Montagné-Huck C., Brunette M. (2017). Economic Analysis of Forest Natural Disturbances: a Century of Research.

Brunette M., Bourke R., Yousefpour R., Hanewinkel M. (2017). Economic Perspectives of Adaptation to Climate Change in Forestry: a Multiple Correspondence Analysis.

Brunette M., Choumert J., Couture S., Montagné-Huck C. (2015). A Meta-analysis of the Risk Aversion Coefficients of Natural Resource Managers Evaluated by Stated Preference Methods. Cahiers du LEF 2015-13.

Selection of publications :

Brunette M., Foncel J., Kéré E. (2017). Attitude towards Risk and Production decision : An Empirical analysis on French private forest owners. Environmental Modeling and Assessment, DOI: 10.1007/s10666-017-9570-6

Brunette M., Couture S., Pannequin F. (2017). Is forest insurance a relevant vector to induce adaptation efforts to climate change ? Annals of Forest Science, 74:41.

Brunette M., Dragicevic A., Lenglet J., Niedzwiedz A., Badeau V., Dupouey J-L. (2017). Biotechnical Portfolio Management of Mixed-Species Forests. Journal of Bioeconomics, DOI: 10.1007/s10818-017-9247-x.

Brunette M., Caurla S. (2016). An Economic Comparison of Risk Handling Measures against Hylobius abietis and Heterobasidion annosum in the Landes de Gascogne Forest. Annals of Forest Science, 70(3):777-787.

Dragicevic A., Lobianco A., Leblois A. (2016). Forest planning and productivity-risk trade-off through the Markowitz mean-variance model. Forest Policy and Economics, 64:25-34.

Brunette M., Holecy J., Sedliak M., Tucek J., Hanewinkel M. (2015). An actuarial model of forest insurance against multiple natural hazards in fir (Abies Alba Mill.) stands in Slovakia. Forest Policy and Economics, 55:46-57.

Brunette M., Cabantous L., Couture S., Stenger A. (2013). The impact of governmental assistance on insurance demand under ambiguity: A theoretical model and an experimental test. Theory and Decision, 75:153-174.