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Hedging with trees: Tail-hedge discounting of long-term forestry returns
Örebro University, Örebro University School of Business.ORCID iD: 0000-0003-1172-1076
Linneaus University, Växjö, Sweden.
2018 (English)In: Journal of Forest Economics, ISSN 1104-6899, E-ISSN 1618-1530, Vol. 30, p. 52-57Article in journal (Refereed) Published
Abstract [en]

Tail-hedge discounting is based on decomposition of returns from long-term investments in a fraction (gamma) that is correlated with consumption and another that is not. The first part is discounted at a discount rate that includes a risk premium, the other with the risk-free rate. We estimate gamma for forestry on Swedish data for stumpage prices and GDP per capita 1909-2012. We demonstrate that the result considerably changes the expected present value of medium-term and long-term forest investments.

Place, publisher, year, edition, pages
Elsevier, 2018. Vol. 30, p. 52-57
Keywords [en]
Discounting, Far-distant future, Declining discount rates, Forestry, Forest economics, Cost-benefit analysis
National Category
Business Administration
Identifiers
URN: urn:nbn:se:oru:diva-66586DOI: 10.1016/j.jfe.2018.02.001ISI: 000428028000006Scopus ID: 2-s2.0-85042597191OAI: oai:DiVA.org:oru-66586DiVA, id: diva2:1197557
Available from: 2018-04-13 Created: 2018-04-13 Last updated: 2018-04-13Bibliographically approved

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Hultkrantz, Lars

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  • nn-NB
  • sv-SE
  • Other locale
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Output format
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  • text
  • asciidoc
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