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Optimal Management of a Renewable Resource Under Multiple Regimes

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  • Sturla F. Kvamsdal

    (SNF – Centre for Applied Research at NHH)

Abstract

Resource industries may be subject to regime shifts in environmental as well as economic conditions. Regime shifts in different dimensions require carefully calculated policies that reflect probabilities and welfare effects. In a simple model, I extend the established approach to regime shifts to consider the combined effects of regimes in multiple dimensions. I consider both exogenous and endogenous risks of regime shifts in cases of both observable and unobservable regimes. The unique model has a nonlinear objective function, and model solutions are established via recent developments in optimization that invoke a vector-valued value function.

Suggested Citation

  • Sturla F. Kvamsdal, 2022. "Optimal Management of a Renewable Resource Under Multiple Regimes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 81(3), pages 481-499, March.
    • Handle: RePEc:kap:enreec:v:81:y:2022:i:3:d:10.1007_s10640-021-00636-z
    DOI: 10.1007/s10640-021-00636-z
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    References listed on IDEAS

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    1. Ren, Bijie & Polasky, Stephen, 2014. "The optimal management of renewable resources under the risk of potential regime shift," Journal of Economic Dynamics and Control, Elsevier, vol. 40(C), pages 195-212.
    2. Polasky, Stephen & de Zeeuw, Aart & Wagener, Florian, 2011. "Optimal management with potential regime shifts," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 229-240, September.
    3. Kvamsdal, Sturla & Maroto, José M. & Morán, Manuel & Sandal, Leif K., 2017. "A bridge between continuous and discrete-time bioeconomic models: Seasonality in fisheries," Ecological Modelling, Elsevier, vol. 364(C), pages 124-131.
    4. Grafton, R. Quentin & Hilborn, Ray & Squires, Dale & Tait, Maree & Williams, Meryl (ed.), 2010. "Handbook of Marine Fisheries Conservation and Management," OUP Catalogue, Oxford University Press, number 9780195370287, Decembrie.
    5. Baggio, Michele & Fackler, Paul L., 2016. "Optimal management with reversible regime shifts," Journal of Economic Behavior & Organization, Elsevier, vol. 132(PB), pages 124-136.
    6. Michele Baggio, 2016. "Optimal Fishery Management with Regime Shifts: An Assessment of Harvesting Strategies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(3), pages 465-492, July.
    7. Jacob LaRiviere & David Kling & James N Sanchirico & Charles Sims & Michael Springborn, 2018. "The Treatment of Uncertainty and Learning in the Economics of Natural Resource and Environmental Management," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 92-112.
    8. Eikeset, Anne Maria & Richter, Andries P. & Dankel, Dorothy J. & Dunlop, Erin S. & Heino, Mikko & Dieckmann, Ulf & Stenseth, Nils Chr., 2013. "A bio-economic analysis of harvest control rules for the Northeast Arctic cod fishery," Marine Policy, Elsevier, vol. 39(C), pages 172-181.
    9. Kvamsdal, Sturla F. & Sandal, Leif K. & Poudel, Diwakar, 2020. "Ecosystem wealth in the Barents Sea," Ecological Economics, Elsevier, vol. 171(C).
    10. Ni, Yuanming & Sandal, Leif Kristoffer, 2019. "Seasonality matters: A multi-season, multi-state dynamic optimization in fisheries," European Journal of Operational Research, Elsevier, vol. 275(2), pages 648-658.
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    Cited by:

    1. Ni, Yuanming & Steinshamn, Stein I. & Kvamsdal, Sturla F., 2022. "Negative shocks in an age-structured bioeconomic model and how to deal with them," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 15-30.
    2. Nkuiya, Bruno & Diekert, Florian, 2023. "Stochastic growth and regime shift risk in renewable resource management," Ecological Economics, Elsevier, vol. 208(C).

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