Reference no: EM132400384

ECON 3730 The Origins of International Inequality - University of Guelph

Question 1. a) It is estimated that forests absorb between 10 and 20 tons of carbon dioxide per hectare each year. The reduction of atmospheric carbon can mitigate or defer global warming. The ability of forests to act as carbon sinks can be considered as a Public Good. Describe in what sense the carbon sequestering services that a forest provides fit the characteristics of a public good? Your description should include the two characteristics of a Public good (name them) and how the carbon sequestering services that a forest fits each of the characteristic.

b) Why can we not rely on the private market system to provide efficient quantities of public goods like carbon sequestering?

Question 2. A forest of 3500 hectares of uniform productivity, 85% of which is occupied by old growth timber with a volume of 2214 cubic metres per hectare, the other 15% by second growth having that will have a volume of 1558 cubic metres per hectare at the planned age of rotation of 82 years.

a) Use Hanzlik formula to calculate the annual allowable cut initially.

b) Use Hanzlik formula to calculate the annual allowable cut after all the old growth has been harvested.

c) What is the fall down effect and what is the suggested method to deal with the fall down effect?

Question 3. A firm developing an uneven-aged age stand management with 3 age classes of trees.The land is currently bare and will require planting costs today of $4500. It predicts that after the development period of 90 years, it will earn a stumpage value of $33000 and have planting costs of $350 every 30 years forever. Using discount rate is 3%, show the present value formula.