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Global non-sustainable harvest of renewable resources reduces their present price but increases their net present value

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  • Lampert, Adam

Abstract

Over-exploitation of natural resources is a major problem, and transitions to sustainable harvest are taking place worldwide. To determine the optimal harvesting strategy, including the optimal speed and approach to transition toward sustainable harvest, policymakers need to estimate the net present values of natural resources. Previous studies have shown that discounting reduces the future value of natural resources, but the long-term increase in their price may partially compensate for discounting. However, the price and future values of natural resources may also be affected by the transition from over-harvesting to sustainable harvest. Here we present a model that endogenizes the effect of non-sustainable harvest on the price of a renewable natural resource. We show that the transition to sustainable harvest is expected to increase the resource’s price significantly, at a rate that is greater than its long-term increase. Incorporating this effect increases the estimated net present value of ecosystems providing renewable natural resources.

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  • Lampert, Adam, 2024. "Global non-sustainable harvest of renewable resources reduces their present price but increases their net present value," Resource and Energy Economics, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:resene:v:76:y:2024:i:c:s0928765523000647
    DOI: 10.1016/j.reseneeco.2023.101409
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    More about this item

    Keywords

    Dual discounting; Optimal harvest; Over-exploitation; Renewable resources; Sustainable harvest;
    All these keywords.

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry

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