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Harvesting in a Fishery with Stochastic Growth and a Mean-Reverting Price

Author

Listed:
  • Sturla Furunes Kvamsdal

    () (NHH Norwegian School of Economics)

  • Diwakar Poudel

    () (NHH Norwegian School of Economics)

  • Leif Kristoffer Sandal

    () (NHH Norwegian School of Economics)

Abstract

Abstract We analyze a continuous, nonlinear bioeconomic model to demonstrate how stochasticity in the growth of fish stocks affects the optimal exploitation policy when prices are stochastic, mean-reverting and possibly harvest dependent. Optimal exploitation has nonlinear responses to the price signal and should be conservative at low levels of biological stochasticity and aggressive at high levels. Price stochasticity induces conservative exploitation with little or no biological uncertainty, but has no strong effect when the biological uncertainty is larger. We further observe that resource exploitation should be conservative when the price reverts slowly to the mean. Simulations show that, in the long run, both the stock level and the exploitation rate are lower than in the deterministic solution. With a harvest-dependent price, the long-run price is higher in the stochastic system. The price mean reversion rate has no influence on the long-run solutions.

Suggested Citation

  • Sturla Furunes Kvamsdal & Diwakar Poudel & Leif Kristoffer 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.
  • Handle: RePEc:kap:enreec:v:63:y:2016:i:3:d:10.1007_s10640-014-9857-x
    DOI: 10.1007/s10640-014-9857-x
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    References listed on IDEAS

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    Cited by:

    1. Zhao, Yu & Yuan, Sanling, 2017. "Optimal harvesting policy of a stochastic two-species competitive model with Lévy noise in a polluted environment," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 477(C), pages 20-33.

    More about this item

    Keywords

    Feedback policy; Fisheries management; Hamilton–Jacobi–Bellman approach; Mean-reversion; Stochastic optimization;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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