A threshold value analysis of proposed forest reserves

Threshold Value Analysis (TVA) may be a useful input into natural resource decision making when non-market values are involved. The decision rule under a TVA is to protect a natural resource if the (non-marketed and unquantified) benefits so arising are deemed to be greater than a threshold value defined by the (marketed and quantified) developmental benefits foregone. In this paper, threshold values are calculated for a range of forest protection options considered under the Regional Forestry Agreements negotiated in New South Wales. A constant value analysis is first undertaken. This is then enhanced by the incorporation of factors that affect the alternative streams of value through time. Extensive sensitivity testing to demonstrate the impact of assumption variations is reported. To put the threshold values so calculated into context, the benefit transfer approach is used to provide estimates of forest protection values.