Valuation and management of tropical forests: Implications of uncertainty and irreversibility

This paper develops a framework for the valuation and management of tropical forests that reflects their ecological and economic characteristics. The analysis demonstrates the importance of modeling the feasible use patterns and the information structure in tropical forest management decisions. The model predicts that cases exist where the foresighted management of forests leads to more preservation than the traditional expected value approach. An application in Thailand provides evidence that such cases occur in relevant ranges of benefit flows. The model focuses tropical forest management on assessments of sustainability and feasible sequences in light of uncertainty and information flows.