A Real Option Approach to the Protection of a Habitat Dependent Endangered Species

We use a real option approach,to determine,optimally,when,a social planner,has to stop or resume,logging in situations where,an endangered,species relies on forest habitat for its survival, and that habitat evolves stochasticly. The model incorporates economic, ecological and social features, and is calibrated to generate an optimal forest management rule that balances the bene…ts from,commercial,forest exploitation with the risks of extinction facing the endangered,species. For the reasonable parameters,used in our application to the Rangifer tarandus caribou, an endangered species in Central Labrador (Canada), the policy of banning logging temporarily,is quite attractive as it does not require long banning,periods while it drastically reduces the extinction risk and increases forest value. Key Words: Real Options; Biodiversity; Endangered,Species; Extinction; Forestry. JEL Classi…cation: C61; C63; D81; Q23; Q28. Résumé