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Renewable resource management with environmental prediction: the importance of structural specification

Author

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  • Chris J. Kennedy
  • Edward B. Barbier

Abstract

Environmental variability can substantially influence renewable resource growth, and as the ability to forecast environmental conditions improves, opportunities for adaptive management emerge. Using a stochastic stockrecruitment model, Costello, et al. ( ) show the optimal management response to a prediction of favourable growth conditions is to reduce current harvests. We find this result may be reversed when environmental variability and stock are substitutes in growth, a possibility that has been ignored by resource economists. As an example, we analyze the South Carolina white shrimp fishery, finding the optimal response to a prediction of favourable overwinter conditions is to increase fall harvests.

Suggested Citation

  • Chris J. Kennedy & Edward B. Barbier, 2013. "Renewable resource management with environmental prediction: the importance of structural specification," Canadian Journal of Economics, Canadian Economics Association, vol. 46(3), pages 1110-1122, August.
    • Handle: RePEc:cje:issued:v:46:y:2013:i:3:p:1110-1122
    DOI: 10.1111/caje.12038
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    Cited by:

    1. Christopher Costello & Bruno Nkuiya & Nicolas Querou, 2017. "Extracting spatial resources under possible regime shift," Working Papers hal-01615939, HAL.
    2. Strand,Jon & Siddiqui,Sauleh, 2015. "Value of improved information about forest protection values, with application to rainforest valuation," Policy Research Working Paper Series 7423, The World Bank.

    More about this item

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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