1Resolving the Conflict between Sustainable Income and Sustainable Forestry: A Subsidy to Sustainable Forestry (Preliminary Version.)

Sustainable management of forestry often entails a financial sacrifice to the owner. If it does, a policy of sustainable forestry involves an implicit “Subsidy to Sustainable Forestry”. Forest stocks are often kept at levels higher, and rotation lengths longer, than appear to be economically optimal. This paper presents an extension to the standard optimal renewable-resource management model that could explain this phenomenon. For an economy with relatively little forestry this involves including the non-market benefits of forests. For an economy with abundant forest stocks, and in which forestry is an important industry, it is suggested that the importance of the indirect social and economic benefits of a sustainable forestry industry could be an explanatory factor. Financial support from the ESRC under award No. R00429524215 is gratefully acknowledged