Diversification of forestry portfolios for climate change and market risk mitigation

JOURNAL OF ENVIRONMENTAL MANAGEMENT

卷:289

Article

West, Thales A. P.^1,2,3  Salekin, Serajis¹  Melia, Nathanael⁴  Wakelin, Steve J.¹  Yao, Richard T.¹  Meason, Dean¹ 

[1] Scion New Zealand Forest Res Inst, Rotorua, New Zealand

[2] Vrije Univ Amsterdam, Inst Environm Studies IVM, Environm Geog Grp, Amsterdam, Netherlands

[3] Univ Cambridge, Ctr Environm Energy & Nat Resource Governance, Cambridge, England

[4] Victoria Univ Wellington, Sch Geog Environm & Earth Sci, Wellington, New Zealand

关键词: Modern portfolio theory;    Climate change adaptation;    3-PG;    Forest management;    Representative concentration pathway;   

DOI  :  10.1016/j.jenvman.2021.112482

来源: Elsevier

【 摘 要 】

Investments in forestry are long-term and thus subject to numerous sources of risk. In addition to the volatility from markets, forestry investments are directly exposed to future impacts from climate change. We examined how diversification of forest management regimes can mitigate the expected risks associated with forestry activities in New Zealand based on an application of Modern Portfolio Theory. Uncertainties in the responses of Pinus radiata (D. Don) productivity to climate change, from 2050 to 2090, were simulated with 3-PG, a process based forest growth model, based on future climate scenarios and Representative Concentration Pathways (RCPs). Future timber market scenarios were based on RCP-specific projections from the Global Timber Model and historical log grade prices. Outputs from 3-PG and the market scenarios were combined to compute annualized forestry returns for four P. radiata regimes for 2050?2090. This information was then used to construct optimal forestry portfolios that minimize investment risk for a given target return under different RCPs, forest productivity and market scenarios. While current P. radiata regimes in New Zealand are largely homogenous, our results suggest that regime diversification can mitigate future risks imposed by climate change and market uncertainty. Nevertheless, optimal portfolio compositions varied substantially across our range of scenarios and portfolio objectives. The application of this framework can help forest managers to better account for future risks in their management decisions.

【 授权许可】

Free