Question

Would a private forest owner normally be expected to reach an efficient balance between using his or her forest for recreation and for harvesting wood? Why or why not?

Answer 1

Private forest owner is expected to reach an efficient balance, because it is a private property ownership by the person that prevents free rider problem as well as excessive use of the forest as a resource. Hence, there is a higher probability that conservation and usage of forest will strike an efficient balance and market failure will not take place. Further, the private owner will spend upon the management of owned forest area and start charging a fee if it is used by others for recreational activities. So, revenue will be generated by the private forest owner without excessive usage of forests and efficient balance will be achieved.