The influence of the competition amongst pressure groups to provide ecosystem services on the optimal rotation length of forest stands

A significant segment of the variety of forest ecosystem services is neither demanded nor supplied through market exchange, but is provided essentially through political processes. In this paper, we present an economic analysis of forest stand management under consideration of politically provided ecosystem services. In this, competition between pressure groups seeking to grasp privileges plays an important role. We extend the Hartman model with elements of the pressure group models. We incorporate the amount of the reward derived from the political contest, the effectiveness factor of the forest owner in the political competition and the lobbying investment made by the forest owner. We show that the competition amongst pressure groups has a profound impact on the optimal rotation length compared to the classical solution by Faustmann. We discuss, how the competition amongst pressure groups shapes the optimal rotation length when forest stand management provides multiple forest ecosystem services. We also address the levels of the reward derived from the political contest and the effectiveness factor in the context of the urban–rural interface. • We extend the Hartman model with elements of the pressure group models. • The competition amongst pressure groups has a profound impact on the optimal rotation length compared to the classical solution by Faustmann. • Strong pressure groups will maintain a longer rotation length for age-increasing rewards for the ecosystem services provided, while weak pressure groups will shorten the rotation length. • Higher rewards for ecosystem services also trigger higher investments in lobbying • Forest owners with a relatively strong competitive position have an incentive to support high valuations of ecosystem services; vice versa.