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Cod today and none tomorrow: The Economic Value of a Marine Reserve

  • R. Quentin Grafton


    (Crawford School of Public Policy, The Australian National University, Australia)

  • Tom Kompas


    (Crawford School of Public Policy, The Australian National University, Australia)

The northern cod fishery was once one of the world’s largest capture fisheries. Using data from the fishery, this research calculated the economic value of a marine reserve using a stochastic optimal control model with a jump-diffusion process. The analysis shows that, an optimal-sized marine reserve in this fishery would have prevented the fishery’s collapse and generated a triple payoff. Even if harvesting had been ‘optimal’ the profits from fishing would have been raised. The recovery time would also have decreased for the biomass to return to its former state and smoothed fishers’ harvests and profits. Following a negative shock, the chance of a catastrophic collapse would have been lowered. Key words: Marine reserves; Stochastic control; Fisheries

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Paper provided by Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University in its series Environmental Economics Research Hub Research Reports with number 0922.

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Date of creation: Mar 2009
Date of revision:
Handle: RePEc:een:eenhrr:0922
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  1. R. Quentin Grafton & Tom Kompas & Pham Van Ha, 2005. "The Economic Payoffs from Marine Reserves: Resource Rents in a Stochastic Environment," International and Development Economics Working Papers idec05-3, International and Development Economics.
  2. Smith, Martin D. & Wilen, James E., 2003. "Economic impacts of marine reserves: the importance of spatial behavior," Journal of Environmental Economics and Management, Elsevier, vol. 46(2), pages 183-206, September.
  3. Daniel E. Lane & Halldor P. Palsson, 1996. "Stock Rebuilding Strategies under Uncertainty: The Case for "Sentinel Fisheries."," Canadian Journal of Economics, Canadian Economics Association, vol. 29(s1), pages 151-56, April.
  4. 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.
  5. Caddy, J. F. & Gulland, J. A., 1983. "Historical patterns of fish stocks," Marine Policy, Elsevier, vol. 7(4), pages 267-278, October.
  6. Kevin Fox & Robert Hill & W. Diewert, 2004. "Identifying Outliers in Multi-Output Models," Journal of Productivity Analysis, Springer, vol. 22(1), pages 73-94, July.
  7. Gaspar, Jess & L. Judd, Kenneth, 1997. "Solving Large-Scale Rational-Expectations Models," Macroeconomic Dynamics, Cambridge University Press, vol. 1(01), pages 45-75, January.
  8. repec:cup:macdyn:v:1:y:1997:i:1:p:45-75 is not listed on IDEAS
  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. 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.
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