IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v132y2016ipbp113-123.html
   My bibliography  Save this article

Natural vs anthropogenic risk reduction: Facing invasion risks involving multi-stable outcomes

Author

Listed:
  • Finnoff, David
  • Horan, Richard D.
  • Shogren, Jason F.
  • Reeling, Carson
  • Berry, Kevin

Abstract

Natural resources important to economic systems are managed in the presence of event uncertainty, marking the transition from a more desirable ex ante state to a less desirable ex post state. The risks of this transition are endogenous and depend on state of the natural resource system and human behavior. In designing least cost policies of risk reduction, policy makers should consider the optimal mix of natural and human risk reduction. Decisions about the best risk reduction mix matter most for systems vulnerable to ex post multi-stability, in which the natural resource system has the potential to begin in one of multiple, locally optimal basins of attraction. This is because ex ante decisions can affect the initial conditions for the ex post system, thereby determining the ex post basin of attraction and the optimal ex post state. In this paper, we find that an ex ante system that is convex and uniquely stable without risk may become non-convex and multi-stable in the presence of endogenous risks and ex post multi-stability. This result arises because ex post non-convexities, and the uncertainties associated with the invasion and its magnitude, can create ex ante non-convexities that generate multiple optimality candidates.

Suggested Citation

  • Finnoff, David & Horan, Richard D. & Shogren, Jason F. & Reeling, Carson & Berry, Kevin, 2016. "Natural vs anthropogenic risk reduction: Facing invasion risks involving multi-stable outcomes," Journal of Economic Behavior & Organization, Elsevier, vol. 132(PB), pages 113-123.
  • Handle: RePEc:eee:jeborg:v:132:y:2016:i:pb:p:113-123
    DOI: 10.1016/j.jebo.2016.05.015
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268116300944
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. 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.
    2. Richard D. Horan & Eli P. Fenichel, 2007. "Economics and Ecology of Managing Emerging Infectious Animal Diseases," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(5), pages 1232-1238.
    3. Lee, Kangoh, 1998. "Risk Aversion and Self-Insurance-cum-Protection," Journal of Risk and Uncertainty, Springer, vol. 17(2), pages 139-150, November.
    4. Mimako Kobayashi & Kimberly Rollins & Michael H. Taylor, 2014. "Optimal Livestock Management on Sagebrush Rangeland with Ecological Thresholds, Wildfire, and Invasive Plants," Land Economics, University of Wisconsin Press, vol. 90(4), pages 623-648.
    5. Zemel, Amos, 2015. "Adaptation, mitigation and risk: An analytic approach," Journal of Economic Dynamics and Control, Elsevier, vol. 51(C), pages 133-147.
    6. Shogren, Jason F. & Crocker, Thomas D., 1991. "Risk, self-protection, and ex ante economic value," Journal of Environmental Economics and Management, Elsevier, vol. 20(1), pages 1-15, January.
    7. Kim, C.S. & Lubowski, Ruben N. & Lewandrowski, Jan & Eiswerth, Mark E., 2006. "Prevention or Control: Optimal Government Policies for Invasive Species Management," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 35(1), April.
    8. Lars J. Olson & Santanu Roy, 2005. "On Prevention and Control of an Uncertain Biological Invasion," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(3), pages 491-497.
    9. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-648, July-Aug..
    10. David Finnoff & Aaron Strong & John Tschirhart, 2008. "A Bioeconomic Model of Cattle Stocking on Rangeland Threatened by Invasive Plants and Nitrogen Deposition," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(4), pages 1074-1090.
    11. Brown, Gardner & Patterson, Trista & Cain, Nicholas, 2011. "The devil in the details: Non-convexities in ecosystem service provision," Resource and Energy Economics, Elsevier, vol. 33(2), pages 355-365, May.
    12. Mimako Kobayashi & Kimberly Rollins & Michael H. Taylor, 2014. "Optimal Livestock Management on Sagebrush Rangeland with Ecological Thresholds, Wildfire, and Invasive Plants," Land Economics, University of Wisconsin Press, vol. 90(4), pages 623-648.
    13. Perrings, Charles & Walker, Brian, 1997. "Biodiversity, resilience and the control of ecological-economic systems: the case of fire-driven rangelands," Ecological Economics, Elsevier, vol. 22(1), pages 73-83, July.
    14. Fenichel, Eli P. & Horan, Richard D. & Bence, James R., 2010. "Indirect management of invasive species through bio-controls: A bioeconomic model of salmon and alewife in Lake Michigan," Resource and Energy Economics, Elsevier, vol. 32(4), pages 500-518, November.
    15. Lars J. Olson & Santanu Roy, 2002. "The Economics of Controlling a Stochastic Biological Invasion," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(5), pages 1311-1316.
    16. W.A. Brock & D. Starrett, 2003. "Managing Systems with Non-convex Positive Feedback," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(4), pages 575-602, December.
    17. Perrings, Charles, 2005. "Mitigation and adaptation strategies for the control of biological invasions," Ecological Economics, Elsevier, vol. 52(3), pages 315-325, February.
    18. Kim, C.S. & Lubowski, Ruben N. & Lewandrowski, Jan & Eiswerth, Mark E., 2006. "Prevention or Control: Optimal Government Policies for Invasive Species Management," Agricultural and Resource Economics Review, Cambridge University Press, vol. 35(01), pages 29-40, April.
    19. Partha Dasgupta & Karl-Göran Mäler, 2003. "The Economics of Non-Convex Ecosystems: Introduction," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(4), pages 499-525, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Endogenous risk; Dynamic optimization;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:132:y:2016:i:pb:p:113-123. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/jebo .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.