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    Author(s): Joseph Buongiorno; Mo Zhou; Craig Johnston
    Date: 2017
    Source: Canadian Journal of Forest Research
    Publication Series: Scientific Journal (JRNL)
    Station: Southern Research Station
    PDF: Download Publication  (864.0 KB)

    Description

    Markov decision process models were extended to reflect some consequences of the risk attitude of forestry decision makers. One approach consisted of maximizing the expected value of a criterion subject to an upper bound on the variance or, symmetrically, minimizing the variance subject to a lower bound on the expected value.  The other method used the certainty equivalent criterion, a weighted average of the expected value and variance.  The two approaches were applied to data for mixed softwood-hardwood forests in the southern United States with multiple financial and ecological criteria.  Compared with risk neutrality or risk seeking, financial risk aversion reduced expected annual financial returns and production and led to shorter cutting cycles that lowered the expected diversity of tree species and size, stand basal area, stored CO2e, and old-growth area.

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    Citation

    Buongiorno, Joseph; Zhou, Mo; Johnston, Craig. 2017.Risk aversion and risk seeking in multicriteria forest management: a Markov decision process approach. Canadian Journal of Forest Research. 47(6): 800-807. https://doi.org/10.1139/cjfr-2016-0502.

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    Keywords

    uneven-aged management, risk aversion, economics, multiple criteria. Markov decision process, quadratic programming

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https://www.fs.usda.gov/treesearch/pubs/54598