Measuring the Impact of Fire Occurrence Risk on the Value of Forest Land at Growing Scots Pine (Pinus sylvestris, L.) and European Beech (Fagus sylvatica, L.) Stands in the Territory of Slovak Paradise

Abstract

The paper informs about the results of economic analysis concerning the projects of Scots pine (Pinus sylvestris, L.) and European beech (Fagus sylvatica, L.) growing within the territory of Slovak Paradise in the presence of the risk of fire. Risk itself is described in terms of observed probabilities of the destruction of forest stands in relation to their age. The physical inputs for both forestry projects were provided by the single-tree growth simulator SIBYLA-Triquetra calibrated for the soil and climate conditions of an observed region. As the measures of profitability for these projects, the deterministic risk-adjusted and the stochastic risk-free soil expectation values under given conditions have been calculated and compared. The risk-free soil expectation value in both cases has been estimated as the present value of future expected cash-flows in the assumed decades of an infinite forestry project given by the proposed numerical algorithm based on the theory of Markov chains. Obtained results point out the fact that the detected fire occurrence risk of growing pine in this territory is significantly higher than in the case of beech stands. This also results in a stronger unfavorable impact on the profitability of an underlying Scots pine growing project. Even though the original risk-adjusted soil expectation value at growing Scots pine is higher, the resulting risk-free soil expectation value is higher only in the case of growing European beech. Surprisingly, the risk of fire does not shorten the optimum rotation period for both of the tree-species investigated.