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Resource Management with Stochastic Recharge and Environmental Threats

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  • Leizarowitz, Arie
  • Tsur, Yacov

Abstract

Exploitation diminishes the capacity of renewable resources to with-stand environmental stress, increasing their vulnerability to extreme conditions that may trigger abrupt changes. The onset of such events depends on the coincidence of extreme environmental conditions (environmental threat) and the resource state (determining its resilience). When the former is uncertain and the latter evolves stochastically, the uncertainty regarding the event occurrence is the result of the combined effect of these two uncertain components. We analyzed optimal resource management in such a setting. Existence of an optimal stationary policy is established and long run properties are characterized. A numerical illustration based on actual data is presented.

Suggested Citation

  • Leizarowitz, Arie & Tsur, Yacov, 2009. "Resource Management with Stochastic Recharge and Environmental Threats," Discussion Papers 52784, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    • Handle: RePEc:ags:huaedp:52784
    DOI: 10.22004/ag.econ.52784
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    References listed on IDEAS

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    1. Yacov Tsur & Amos Zemel, 2009. "Endogenous Discounting and Climate Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 44(4), pages 507-520, December.
    2. Franz Wirl, 2007. "Energy Prices and Carbon Taxes under Uncertainty about Global Warming," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 36(3), pages 313-340, March.
    3. Tsur, Yacov & Zemel, Amos, 1998. "Pollution control in an uncertain environment," Journal of Economic Dynamics and Control, Elsevier, vol. 22(6), pages 967-975, June.
    4. Tsur Yacov & Zemel Amos, 1995. "Uncertainty and Irreversibility in Groundwater Resource Management," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 149-161, September.
    5. Martin L. Weitzman, 2009. "On Modeling and Interpreting the Economics of Catastrophic Climate Change," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 1-19, February.
    6. Tsur, Yacov & Zemel, Amos, 1996. "Accounting for global warming risks: Resource management under event uncertainty," Journal of Economic Dynamics and Control, Elsevier, vol. 20(6-7), pages 1289-1305.
    7. Yacov Tsur & Amos Zemel, 2008. "Regulating environmental threats," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 39(3), pages 297-310, March.
    8. -, 2009. "The economics of climate change," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38679, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    9. Cropper, M. L., 1976. "Regulating activities with catastrophic environmental effects," Journal of Environmental Economics and Management, Elsevier, vol. 3(1), pages 1-15, June.
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    Cited by:

    1. Zemel, Amos, 2012. "Precaution under mixed uncertainty: Implications for environmental management," Resource and Energy Economics, Elsevier, vol. 34(2), pages 188-197.

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    Environmental Economics and Policy;

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