Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/244517 
Year of Publication: 
2016
Series/Report no.: 
Working Paper No. 2/2016
Publisher: 
Örebro University School of Business, Örebro
Abstract: 
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.
Subjects: 
discounting
far distant future
declining discount rates
forestry
forest economics
cost-benefit analysis
JEL: 
D61
D63
D81
D92
Q23
Document Type: 
Working Paper

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