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Time Scale Externalities and the Management of Renewable Resources

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  • Vardas, Giannis
  • Xepapadeas, Anastasios

Abstract

The evolution of renewable resources is characterized in many cases by different time scales where some state variables such as biomass, may evolve relatively faster than other state variables such as carrying capacity. Ignoring this time scale separation means that a slowly changing variable is treated as constant over time. Management rules designed without accounting for time scale separation will result in inefficiencies in resource management. We call this inefficiency time scale externality and we analyze renewable resource harvesting when carrying capacity evolves slowly, either in response to exogenous forcing or in response to emissions generated by the industrial sector of the economy. We study cooperative and non-cooperative solutions under time scale separation. Using singular perturbation reduction methods (Fenichel 1979), we examine the role of different time scales in environmental management and the potential errors in optimal regulation when time scale separation is ignored.

Suggested Citation

  • Vardas, Giannis & Xepapadeas, Anastasios, 2015. "Time Scale Externalities and the Management of Renewable Resources," Climate Change and Sustainable Development 202115, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemcl:202115
    DOI: 10.22004/ag.econ.202115
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    References listed on IDEAS

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    Cited by:

    1. Petrohilos-Andrianos, Yannis & Xepapadeas, Anastasios, 2017. "Resource harvesting regulation and enforcement: An evolutionary approach," Research in Economics, Elsevier, vol. 71(2), pages 236-253.
    2. María Pilar Martínez-García & José Rodolfo Morales, 2019. "Resource effect in the Core–Periphery model," Spatial Economic Analysis, Taylor & Francis Journals, vol. 14(3), pages 339-360, July.
    3. Giannis Vardas & Anastasios Xepapadeas, 2015. "Managing Interacting Populations under Time Scale Separation," DEOS Working Papers 1510, Athens University of Economics and Business.

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    More about this item

    Keywords

    Resource /Energy Economics and Policy;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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