Towards a Dynamic Ecol-Econ CGE Model with Forest as Biomass Capital

24 Pages Posted: 12 Apr 2010  

Örjan Furtenback

Swedish University of Agricultural Sciences (SLU) - Department of Forest Economics

Date Written: April 8, 2010

Abstract

This study presents a Dynamic Computable General Equilibrium model that combines economic and ecological aspects of forest biomass. A framework is introduced for modeling the growth of a biomass stock which interacts with economic sectors. Harvest of and demand for forest products and forest amenities are determined endogenously in an inter-temporally consistent way. The idea is based on a Markovian growth model of the forest. The study demonstrates an approach for incorporating non-market values of forests, such as carbon sequestration, recreation and biodiversity, into a growth model. A simulation illustrates harvest behaviour when the economy is subjected to shocks.

Keywords: Dynamic CGE, Markovian growth, Ecosystem modeling, Inter-temporal optimization, Infinite-horizon equilibria

JEL Classification: C68, D58, Q26

Suggested Citation

Furtenback, Örjan, Towards a Dynamic Ecol-Econ CGE Model with Forest as Biomass Capital (April 8, 2010). CERE Working Paper No. 2010:6. Available at SSRN: https://ssrn.com/abstract=1586271 or http://dx.doi.org/10.2139/ssrn.1586271

Örjan Furtenback (Contact Author)

Swedish University of Agricultural Sciences (SLU) - Department of Forest Economics ( email )

S-901 83 Umea
Sweden

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