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Delaying the Catastrophic Arrival of the Brown Tree Snake to Hawaii

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Author Info

  • Kimberly Burnett

    ()
    (Department of Economics, University of Puget Sound)

  • James Roumasset

    (Department of Economics, University of Hawaii at Manoa)

  • Yacov Tsur

    (Department of Agricultural Economics & Management, Hebrew University of Jerusalem)

Abstract

This paper develops a two-stage model for the optimal management of a potential invasive species. The arrival of an invasive species is modeled as an irreversible event with an uncertain arrival time. The model is solved in two stages, beginning with the post-invasion stage. In this stage, we assume perfect certainty regarding population size and arrivals. The loss-minimizing paths of prevention and control are identified, resulting in a minimized present value penalty associated with the invasion. After calculating this penalty, we analyze the pre-invasion stage and solve for the level of prevention expenditures that will minimize expected total cost. For the case of the Brown Tree Snake potentially invading Hawaii, we find that under a regime of precommitment, pre-invasion expenditures on prevention should be approximately $3.2 million today, decreasing every year until invasion. However, if the planner is permitted to re-evaluate the threat following a non-event, prevention will be lower ($2.96 million a year) and constant until invasion. Once invasion occurs, optimal management requires lower annual expenditures on prevention ($3.1 million) but requires $1.6 million to be spent on control annually to keep the population at its steady state level.

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File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_07-15.pdf
File Function: First version, 2007
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Bibliographic Info

Paper provided by University of Hawaii at Manoa, Department of Economics in its series Working Papers with number 200715.

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Length: 27 pages
Date of creation: 07 Jul 2007
Date of revision:
Handle: RePEc:hai:wpaper:200715

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Related research

Keywords: catastrophe; hazard function; invasive species; Brown Tree Snake; Boiga irregularis; prevention and control; Hawaii;

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  1. Fisher, Anthony C. & Hanemann, W. Michael, 1987. "Quasi-option value: Some misconceptions dispelled," Journal of Environmental Economics and Management, Elsevier, vol. 14(2), pages 183-190, June.
  2. Epstein, Larry G, 1980. "Decision Making and the Temporal Resolution of Uncertainty," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(2), pages 269-83, June.
  3. Andrew B. Abel & Janice B. Eberly, . "The Effects of Irreversibility and Uncertainty on Capital Accumulation," Rodney L. White Center for Financial Research Working Papers 21-95, Wharton School Rodney L. White Center for Financial Research.
  4. Gollier, Christian & Jullien, Bruno & Treich, Nicolas, 2000. "Scientific progress and irreversibility: an economic interpretation of the 'Precautionary Principle'," Journal of Public Economics, Elsevier, vol. 75(2), pages 229-253, February.
  5. Knowler, Duncan & Barbier, Edward, 2005. "Importing exotic plants and the risk of invasion: are market-based instruments adequate?," Ecological Economics, Elsevier, vol. 52(3), pages 341-354, February.
  6. Gollier, Christian & Treich, Nicolas, 2003. " Decision-Making under Scientific Uncertainty: The Economics of the Precautionary Principle," Journal of Risk and Uncertainty, Springer, vol. 27(1), pages 77-103, August.
  7. Kolstad, Charles D., 1996. "Fundamental irreversibilities in stock externalities," Journal of Public Economics, Elsevier, vol. 60(2), pages 221-233, May.
  8. Arrow, Kenneth J & Fisher, Anthony C, 1974. "Environmental Preservation, Uncertainty, and Irreversibility," The Quarterly Journal of Economics, MIT Press, vol. 88(2), pages 312-19, May.
  9. Mash, Richard, 1999. "Irreversible investment and the expected capital stock with stationary uncertainty," Economics Letters, Elsevier, vol. 64(2), pages 193-196, August.
  10. Henry, Claude, 1974. "Investment Decisions Under Uncertainty: The "Irreversibility Effect."," American Economic Review, American Economic Association, vol. 64(6), pages 1006-12, December.
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