Journal of Forest Economics > Vol 20 > Issue 1

Cost-effective biodiversity restoration with uncertain growth in forest habitat quality

Ing-Marie Gren, Department of Economics, Swedish University of Agricultural Sciences, Sweden, , Peter Baxter, Centre for Applications in Natural Resource Mathematics, School of Mathematics and Physics, University of Queensland, Australia, , Grzegorz Mikusinski, Department of Ecology, Grimsö Wildlife Research Station, Swedish University of Agricultural Sciences, Sweden, , Hugh Possingham, The Ecology Centre and Centre for Applied Environmental Decision Analysis, School of Biological Sciences, University of Queensland, Australia,
Suggested Citation
Ing-Marie Gren, Peter Baxter, Grzegorz Mikusinski and Hugh Possingham (2014), "Cost-effective biodiversity restoration with uncertain growth in forest habitat quality", Journal of Forest Economics: Vol. 20: No. 1, pp 77-92.

Publication Date: 0/1/2014
© 0 2014 Ing-Marie Gren, Peter Baxter, Grzegorz Mikusinski, Hugh Possingham
JEL Codes:C61Q20Q57
Cost-effective biodiversity restorationUncertaintySpatial and temporal heterogeneityChance constrained programmingWhite-backed woodpecker in Sweden


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In this article:
A chance-constrained model for optimal site selection 
Application to habitats for white-backed woodpecker in Sweden 
Summary and discussion 


This paper develops a dynamic model for cost-effective selection of sites for restoring biodiversity when habitat quality develops over time and is uncertain. A safety-first decision criterion is used for ensuring a minimum level of habitats, and this is formulated in a chance-constrained programming framework. The theoretical results show; (i) inclusion of quality growth reduces overall cost for achieving a future biodiversity target from relatively early establishment of habitats, but (ii) consideration of uncertainty in growth increases total cost and delays establishment, and (iii) cost-effective trading of habitat requires exchange rate between sites that varies over time. An empirical application to the red listed umbrella species – white-backed woodpecker – shows that the total cost of achieving habitat targets specified in the Swedish recovery plan is doubled if the target is to be achieved with high reliability, and that equilibrating price on a habitat trading market differs considerably between different quality growth combinations.