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The Economic Payoffs from Marine Reserves: Resource Rents in a Stochastic Environment

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  • R. QUENTIN GRAFTON
  • TOM KOMPAS
  • PHAM VAN HA

Abstract

In this paper we analysed the economic payoffs from marine reserves using a stochastic optimal control model, with a jump-diffusion process. The results show that even if the reserve and harvested populations face the same negative shocks, harvesting is optimal, the population is persistent and there is no uncertainty over current stock size, a reserve can increase resource rents. Using fishery data we demonstrate that the payoffs from a reserve, and also optimum reserve size, increase the larger is the magnitude of the negative shock, the greater its frequency and the larger its relative impact on the harvested population. Copyright © 2006 The Economic Society of Australia.

Suggested Citation

  • R. Quentin Grafton & Tom Kompas & Pham Van Ha, 2006. "The Economic Payoffs from Marine Reserves: Resource Rents in a Stochastic Environment," The Economic Record, The Economic Society of Australia, vol. 82(259), pages 469-480, December.
  • Handle: RePEc:bla:ecorec:v:82:y:2006:i:259:p:469-480
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    References listed on IDEAS

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    1. Alp E. Atakan, 2003. "Stochastic convexity in dynamic programming," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(2), pages 447-455, September.
    2. R. Quentin Grafton & Leif K. Sandal & Stein Ivar Steinshamn, 2000. "How to Improve the Management of Renewable Resources: The Case of Canada's Northern Cod Fishery," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(3), pages 570-580.
    3. repec:cup:macdyn:v:1:y:1997:i:1:p:45-75 is not listed on IDEAS
    4. Judd, Kenneth L., 1997. "Computational economics and economic theory: Substitutes or complements?," Journal of Economic Dynamics and Control, Elsevier, vol. 21(6), pages 907-942, June.
    5. Sanchirico, James N. & Wilen, James E., 1999. "Bioeconomics of Spatial Exploitation in a Patchy Environment," Journal of Environmental Economics and Management, Elsevier, vol. 37(2), pages 129-150, March.
    6. Boersma, P. Dee & Parrish, Julia K., 1999. "Limiting abuse: marine protected areas, a limited solution," Ecological Economics, Elsevier, vol. 31(2), pages 287-304, November.
    7. Caddy, J. F. & Gulland, J. A., 1983. "Historical patterns of fish stocks," Marine Policy, Elsevier, vol. 7(4), pages 267-278, October.
    8. Sanchirico, James N. & Wilen, James E., 2001. "A Bioeconomic Model of Marine Reserve Creation," Journal of Environmental Economics and Management, Elsevier, vol. 42(3), pages 257-276, November.
    9. Pezzey, John C. V. & Roberts, Callum M. & Urdal, Bjorn T., 2000. "A simple bioeconomic model of a marine reserve," Ecological Economics, Elsevier, vol. 33(1), pages 77-91, April.
    10. Gaspar, Jess & L. Judd, Kenneth, 1997. "Solving Large-Scale Rational-Expectations Models," Macroeconomic Dynamics, Cambridge University Press, vol. 1(01), pages 45-75, January.
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    Cited by:

    1. R. Quentin Grafton & Tom Kompas, 2014. "Three Pillars of Fisheries Policy," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 1(3), pages 609-614, September.
    2. Long Chu & Tom Kompas, 2014. "Targets and Fisheries Management in the Asia and Pacific Region," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 1(3), pages 615-622, September.
    3. Stefano B. Longo & Brett Clark & Thomas E. Shriver & Rebecca Clausen, 2016. "Sustainability and Environmental Sociology: Putting the Economy in its Place and Moving Toward an Integrative Socio-Ecology," Sustainability, MDPI, Open Access Journal, vol. 8(5), pages 1-17, May.
    4. R. Quentin Grafton & Tom Kompas & Pham Van Ha, 2009. "Cod Today and None Tomorrow: The Economic Value of a Marine Reserve," Land Economics, University of Wisconsin Press, vol. 85(3), pages 454-469.
    5. Grafton, R. Quentin & Akter, Sonia & Kompas, Tom, 2009. "Guide to the Ex-Ante Socio-Economic Evaluation of Marine Protected Areas," Research Reports 94827, Australian National University, Environmental Economics Research Hub.
    6. Yamazaki, Satoshi & Grafton, R. Quentin & Kompas, Tom, 2010. "Non-consumptive values and optimal marine reserve switching," Ecological Economics, Elsevier, vol. 69(12), pages 2427-2434, October.
    7. repec:gam:jsusta:v:8:y:2016:i:5:p:437:d:69338 is not listed on IDEAS
    8. repec:eee:ecolec:v:146:y:2018:i:c:p:359-369 is not listed on IDEAS
    9. Sturla Kvamsdal & Diwakar Poudel & Leif Sandal, 2016. "Harvesting in a Fishery with Stochastic Growth and a Mean-Reverting Price," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(3), pages 643-663, March.
    10. Yamazaki, Satoshi, 2008. "Marine Reserves Switching under Uncertainty," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6003, Australian Agricultural and Resource Economics Society.
    11. Yamazaki, Satoshi & Jennings, Sarah & Quentin Grafton, R. & Kompas, Tom, 2015. "Are marine reserves and harvest control rules substitutes or complements for rebuilding fisheries?," Resource and Energy Economics, Elsevier, vol. 40(C), pages 1-18.
    12. Wielgus, Jeffrey & Sala, Enric & Gerber, Leah R., 2008. "Assessing the ecological and economic benefits of a no-take marine reserve," Ecological Economics, Elsevier, vol. 67(1), pages 32-40, August.
    13. Viktoria Kahui & William Alexander, 2008. "A Bioeconomic Analysis of Marine Reserves for Paua (Abalone) Management at Stewart Island, New Zealand," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(3), pages 339-367, July.
    14. Sarkar, Sudipto, 2009. "Optimal fishery harvesting rules under uncertainty," Resource and Energy Economics, Elsevier, vol. 31(4), pages 272-286, November.
    15. Greenville, Jared W. & MacAulay, T. Gordon, 2007. "Bioeconomic analysis of protected area use in fisheries management," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(4), December.

    More about this item

    JEL classification:

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

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