RT Journal Article
SR Electronic
T1 Prospect Theory and Tenure Reform: Impacts on Forest Management
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 405
OP 424
DO 10.3368/le.94.3.405
VO 94
IS 3
A1 Sullivan, Karen A.
A1 Uchida, Emi
A1 Sproul, Thomas W.
A1 Xu, Jintao
YR 2018
UL http://le.uwpress.org/content/94/3/405.abstract
AB We examine the role of risk and time preferences in how forest owners respond to forest certification. We test hypotheses from a two-period harvest model derived from prospect theory in the context of Fujian, China, where new forest certification started in 2003. Using survey and field experiment data, we find that certification resulted in reduced harvesting, and the effect was larger for households who are more risk averse and exhibited distorted probability weighting. In contrast, loss averse households increased harvesting after certification. These findings suggest that diverse individual preferences may be a source of impact heterogeneity for forest certification. (JEL Q23, Q56)