Source: OREGON STATE UNIVERSITY submitted to NRP
PARTNERSHIP: A GENERALIZED FOREST NATURAL CAPITAL VALUATION MODEL: IMPROVING SCOPE, REALISM, AND UNCERTAINTY QUANTIFICATION
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
ACTIVE
Funding Source
AFRI COMPETITIVE GRANT
Reporting Frequency
Annual
Accession No.
1032632
Grant No.
2024-67023-42975
Cumulative Award Amt.
$799,590.00
Proposal No.
2023-09535
Multistate No.
(N/A)
Project Start Date
Sep 1, 2024
Project End Date
Aug 31, 2027
Grant Year
2024
Program Code
[A1651]- Agriculture Economics and Rural Communities: Environment
Recipient Organization
OREGON STATE UNIVERSITY
(N/A)
CORVALLIS,OR 97331
Performing Department
(N/A)
Non Technical Summary
The Biden administration recently released a strategy for augmenting the national accounts used to calculate U.S. Gross Domestic Product with a new set of accounts that measure the abundance and economic value of natural capital. One of these will be a "forest account". The best-available model for quantifying the accounting price of forest natural capital is inadequate for producing a national forest account for two reasons: 1) overly simplistic ecological assumptions; and 2) the lack of a management model for public forests. This project will develop a generalized forest natural capital accounting price (FNCAP) model that improves on current methodology in terms of behavioral scope, ecological and economic realism, and uncertainty quantification. We will first develop an improved private land FNCAP model that includes fire risk in the ecological and behavioral sub-models. Building on this, we will introduce the first public land FNCAP model capable of measuring social forest capital accounting prices. To do so, we will incorporate original estimates of the nonmarket value of forest-provide ecosystem services into the calculation. We will apply the FNCAP model to rich economic and ecological data from forest land in west coast states. Our analysis will also include the first rigorous uncertainty quantification analysis of FNCAP estimates. This research responds directly to priorities of the Environmental and Natural Resource Economics (A1651) program area. We will do so by developing improved methods for valuing forest natural capital and through a novel integration of nonmarket valuation results into natural capital accounting.
Animal Health Component
(N/A)
Research Effort Categories
Basic
100%
Applied
(N/A)
Developmental
(N/A)
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
1230699301050%
6050699301050%
Knowledge Area
605 - Natural Resource and Environmental Economics; 123 - Management and Sustainability of Forest Resources;

Subject Of Investigation
0699 - Trees, forests, and forest products, general;

Field Of Science
3010 - Economics;
Goals / Objectives
This project will develop a generalized forest natural capital accounting price (FNCAP) model that improves on current methodology in terms of behavioral scope, ecological and economic realism, and uncertainty quantification. The goals of the project are to:Incorporate fire risk into an FNCAP analysis of private forest landAdd the forest-provided services of carbon sequestration and habitat provision to a FNCAP analysis of public forest land.Develop and implement a method for quantifying uncertainty associated with FNCAP estimates.
Project Methods
We will produce an original choice experiment survey of public prefernces for the conservation of forest-dependent species in western Oregon. The survey will be conducted by mail and will enroll a random sample of households in Northern California, Oregon, and Washington. The survey will employ the Dillman multiple-mailing method. The instrument will be pretested using samples of both undergraduate students and a representative sample recruited by a professional market research firm. A pre-test survey will be used to to construct a choice experiment design that is efficient with respect to a baseline empirical specification. The primary empirical tool use to analyze the final returned sample will be econometric random utility models, which will generate estimates of household willigness-to-pay for marginal and non-marginal changes in survey attributes.FNCAP model construction involves building a numerical dynamic bioeconomic model of forest resource use. A variety of empirical methods will be used to parameterize the various model components, which can be divided into ecological and economic sub-models. The ecological model will represent forest growth, fire, and forest-dependent species biodiversity yield dynamics. To model forest growth, key data sources will include the Forest Inventory Analysis (FIA) database. The economic model components include behavioral models predicting forest harvest decisionas and a reward function capturing extractive (e.g., timber harvest) and non-extractive value flows. Final estimates obtained from the choice experiment survey will be integrated into the reward function corresponding to the public land FNCAP model version.The assembled FNCAP models will be studied using numerical methods to recover the implicit accounting prices. The uncertainty quantification objective will be pursued for each FNCAP model version using Monte Carlo methods, along with sensitivity analyses centered on re-solving the FNCAP equation numerically using alternative model assumptions (e.g., functional form choices).

Progress 09/01/24 to 08/31/25

Outputs
Target Audience:The target audience for this research includes local, state, and federal policy makers, as well as forest products business leadersand community groups focused on forest stewardship in the Western United States. We also believe findings of this research will be of interest to the scientific community. Although our aim is to engage with all of these audiences, in this reporting period we have reached primarily state of Oregon resource managers. This was accomplished through multiple in-person meetings with Oregon Department of Forestry personnel as part of the development process for a survey that is part of the project. Changes/Problems:A qualitative change to our approach to the survey of public preferences under goal #2 was a switch to asking respondent preferences for forest management overall, rather than preferences for conserving individual species. This change was made due to input from the forest ecology specialist co-PIs on the research team. This framing was also found to be easier to understand for focus group participants drawn from the public. The end uses of the survey for FNCAP modeling will be the same, so it was the determination of the research team that this shift in emphasis did not result in a deviation from project goals. This approach did not affect project costs, and if anything it helped to keep the survey development work on track with respect to the original proposal timeline. What opportunities for training and professional development has the project provided?The graduate student research assistant recruited for this grant worked closely with the co-PIs from the beginning of the grant, including attending weekly meetings and receiving personalized mentoring directed toward getting him started with forest economics. How have the results been disseminated to communities of interest?We have presented progress updates from our survey work to the Oregon Department of Forestry, including multiple in-person meetings to receive feedback on the survey instrument (project goal #2) What do you plan to do during the next reporting period to accomplish the goals?In the upcoming project period we plan to do the following: 1.Incorporate fire risk into an FNCAP analysis of private forest land Complete necessary data analysis and implementation of the FNCAP model for private forest land, focusing initially on Oregon. Results for Oregon will be presented to stakeholders and submitted to a peer-reviewed academic journal. 2.Add the forest-provided services of carbon sequestration and habitat provision to a FNCAP analysis of public forest land Results from the full survey, which is scheduled to be deployed through late September - early October 2025, will be analyzed statistically. Preliminary analysis of the survey will be presented to stakehodlers and submitted to a peer-reviewed academic journal. Model development work will focus on analyzing public forest harvest decisions for inclusion in the FNCAP framework. 3.Develop and implement a method for quantifying uncertainty associated with FNCAP estimates Building on the results for goal #1, co-PIs will develop and test uncertainty quantification methods for the private forest land FNCAP model.

Impacts
What was accomplished under these goals? Our activities and therefore accomplishments during the first project period focused on goals #1 and #2: 1. Incorporate fire risk into an FNCAP analysis of private forest land We have made substantial progress toward compiling necessary data sets, including obtaining fine-scale micro data on private harvest decisions and developing suitable measures of fire risk facing private forest land. Additionally, we developed original code to test our approach to calculating forest natural capital values. 2.Add the forest-provided services of carbon sequestration and habitat provision to a FNCAP analysis of public forest land We designed, focus-group tested, and implemented a pilot survey of public preferences for state forest land in Oregon. The pilot survey was completed in early August 2025. 3.Develop and implement a method for quantifying uncertainty associated with FNCAP estimates Activities associated with the project goal are scheduled for grant periods 2 and 3. Therefore we have no specific accomplishments to report pertaining to this goal, other than work for goal #1 which is closely linked to this project goal.

Publications