Documento de trabajo
The insurance value of forests in supplying climate regulation
Fecha
2012Registro en:
Serie Documentos de Trabajo No. 372, pp. 1 - 21, Diciembre, 2012
Autor
Figueroa Benavides, Eugenio
Pasten C., Roberto
Institución
Resumen
This brief paper proposes an analytical method for estimating the economic
value of forest ecosystems in supplying climate regulation. If, as argued by several
authors, forests ecosystems serve as hedging against climatic risk, then natural
ecosystems may act as substitutes for market insurance. This ecosystem service of
climate regulation can be economically valued by the marginal reduction in the
willingness of risk-averse individuals to pay to avoid risk. We formally develop this
novel methodology. As an illustration, we provide an estimate of the insurance value
of climate regulation provided by forests using data on insurance premiums paid by
local Chilean farmers. The insurance value of climate regulation is estimated to be
approximately USD 0.0733 per hectare of forest. The framework that is proposed in
this paper is useful and relevant for the cost-benefit analysis of natural resource
conservation investments.