Hedging with Trees: Tail-Hedge Discounting of Long-Term Forestry Returns

Arbeitspapier

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 in three forestry cases that the result considerably changes the expected present value of long-term forestry investments.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2/2016

Classification and Topics

• Classification: Wirtschaft ; Allocative Efficiency; Cost-Benefit Analysis ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Criteria for Decision-Making under Risk and Uncertainty ; Renewable Resources and Conservation: Forestry
• Subject: discounting ; far distant future ; declining discount rates ; forestry ; forest economics ; cost-benefit analysis

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hultkrantz, Lars ; Mantalos, Panagiotis
• Event: Veröffentlichung
• (who): Örebro University School of Business
• (where): Örebro
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/244517
• Last update: 10.03.2025, 11:44 AM CET