Selecting Forest Sites for Voluntary Conservation with Robust Portfolio Modeling
Antti Punkka, Juuso Liesiö and Ahti Salo

Helsinki University of Technology
Systems Analysis Laboratory
P.O. Box 1100, 02015 TKK, Finland
E-mails: antti.punkka@tkk.fi, juuso.liesio@tkk.fi, ahti.salo@tkk.fi
Tel. +358-9-451 3056, fax +358-9-451 3096

Abstract 
The objective of the METSO program (2003-2007) is to protect biodiversity in forests in Southern Finland and in parts of Lapland and Province of Oulu. The program is lead by the Ministry of Agriculture and Forestry in cooperation with the Ministry of the Environment and it consists of 17 subprograms. The subprograms include pilot programs to test new voluntary means for forest owners to increase biodiversity in forests.
In the five experimental pilot projects started so far, private forest owners have had the possibility to offer their sites for conservation against monetary compensation. The forest owners have been informed about the evaluation criteria and experts have assisted in making a compensation offer with the help of an additive multi-criteria scoring framework, in which both forest and conservation values are taken into account. For instance in Satakunta, the pilot has been ongoing since 2003 and yearly some 400 000 euros have been spent on preserving an annual total of some 2 400 ha forest for mainly ten years period.
The multi-criteria model used in Satakunta has following debatable methodological characteristics: (i) criterion-specific value functions used are piecewise constant and do not make full use of criterion-specific measurements, (ii) attribute weights are exact point estimates which provide no results about the sensitivity of the results subject to model parameters, (iii) criterion-specific values have been given accurately on a sparse scale also even qualitative criteria so that subjective assessments have played an important role in compensation estimates, (iv) the sites have been mainly selected one-by-one whereby portfolio effects such as synergies gained by connectivity of sites or minimum requirements of the network have not been explicitly taken into account.
To address the limitations caused by these characteristics, we consider how Robust Portfolio Modeling (RPM) methodology (Liesiö et al. 2005) can be used to support the selection of forest sites. In RPM, additive value function is used to obtain both the overall values of sites and site portfolios. Since additive models have already been used in the pilot projects, the main idea of the model would likely be accepted and understood by the experts responsible for site selection. Furthermore, RPM offers additional benefits compared to the prevailing praxis; RPM explicitly accounts for the limited compensation budget, accommodates incompletely defined site characteristics and preferences over the importance of different criteria (cf. Preference Programming methodology; Salo and Hämäläinen 1992, 1995, 2001, Salo and Punkka 2005, Punkka and Salo 2005), allows for the modeling of site synergies and enables global sensitivity analysis with regard to importance of criteria or sites’ characteristics. Based on the computation of all non-dominated site portfolios, RPM provides recommendations about which sites should be included in and which should be excluded from conservation plans, hence allowing judgmental appraisal to be focused on the remaining ones.
Related References
Liesiö, J., Mild, P., Salo, A. (2005). Preference Programming for Robust Portfolio Modeling and Project Selection, submitted manuscript, Systems Analysis Laboratory, TKK. Available at http://www.sal.hut.fi/Publications/m-index.html
Memtsas, D. (2003). Multiobjective Programming Methods in the Reserve Selection Problem. European Journal of Operational Research 150/3, 640–652.
Punkka, A., Salo, A. (2005). Preference Programming with Incomplete Ordinal Information. submitted manuscript. Systems Analysis Laboratory, TKK. Available at http://www.sal.hut.fi/Publications/m-index.html 
Salo, A., Hämäläinen, R. P. (1992). Preference Assessment by Imprecise Ratio Statements. Operations Research 40/6, 1053–1061.
Salo, A., Hämäläinen, R. P. (1995). Preference Programming through Approximate Ratio Comparisons. European Journal of Operational Research 82/3, 458–475.
Salo, A., Hämäläinen, R. P. (2001). Preference Ratios in Multiattribute Evaluation (PRIME) – Elicitation and Decision Procedures under Incomplete Information. IEEE Transactions on Systems, Man, and Cybernetics – Part A: Systems and Humans 31/6, 533–545.
Salo, A., Punkka, A. (2005). Rank Inclusion in Criteria Hierarchies. European Journal of Operational Research. 163(2), 338–356.
Related Web links
METSO-program: http://www.mmm.fi/metso/international/
Robust Portfolio Modeling: http://www.rpm.tkk.fi/
Web pages for pilot projects (in finnish):
Keski-Karjalan lehtoverkosto: http://www.metsakeskus.fi/web/fin/metsakeskukset/Pohjois-Karjala/projektit/Keskikarjalan_+lehtoverkosto+_hanke/etusivu.htm
Satakunnan luonnonarvokauppa: http://www.kase.fi/metsakeskukset/lounais/palvelut/luonnonarvokauppa/
Hämeen Metso: http://www.metsakeskus.fi/web/fin/metsakeskukset/Hame-Uusimaa/projektit/hameen_metso/etusivu.htm
Lohjan seudun MetsäVasu: http://www.familytimber.com/mhy/lansiuusimaa/metsavasu/paasivu.htm
Merestä metsäksi: http://www.kase.fi/metsakeskukset/pp/metso/
SAL – Environmental Decision Making and Participation: http://www.environment.sal.tkk.fi/
Authors’ home pages:
Antti Punkka: http://www.sal.hut.fi/Personnel/Homepages/AnttiP.html
Juuso Liesiö: http://www.sal.hut.fi/Personnel/Homepages/JuusoL.html
Ahti Salo: http://www.sal.hut.fi/Personnel/Homepages/AhtiS.html