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

Author

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  • R. Quentin Grafton
  • Tom Kompas
  • Pham Van Ha

Abstract

The paper analyses the economic payoffs from marine reserves using a stochastic optimal control model. The results show that even if the reserve and harvested populations face the same negative shocks, harvesting is optimal, the population is persistent and with no uncertainty over current stock size, a reserve can increase resource rents. Using actual 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.

Suggested Citation

  • 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.
  • Handle: RePEc:idc:wpaper:idec05-3
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    File URL: https://crawford.anu.edu.au/degrees/idec/working_papers/IDEC05-3.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. repec:cup:macdyn:v:1:y:1997:i:1:p:45-75 is not listed on IDEAS
    3. 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.
    4. Caddy, J. F. & Gulland, J. A., 1983. "Historical patterns of fish stocks," Marine Policy, Elsevier, vol. 7(4), pages 267-278, October.
    5. Gaspar, Jess & L. Judd, Kenneth, 1997. "Solving Large-Scale Rational-Expectations Models," Macroeconomic Dynamics, Cambridge University Press, vol. 1(1), pages 45-75, January.
    6. R. Grafton & Tom Kompas & Viktoria Schneider, 2005. "The Bioeconomics of Marine Reserves: A Selected Review with Policy Implications," Journal of Bioeconomics, Springer, vol. 7(2), pages 161-178, January.
    7. 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.
    8. 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.
    9. 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.
    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.
    11. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. 285 – The collapse of North Atlantic Cod
      by David Pannell in Pannell Discussions on 2015-11-02 21:00:27
    2. 286 – Marine reserves and tourism benefits
      by David Pannell in Pannell Discussions on 2015-11-09 21:00:35

    Citations

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    Cited by:

    1. 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), pages 1-22.
    2. Yamazaki, Satoshi, 2008. "Marine Reserves Switching under Uncertainty," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6003, Australian Agricultural and Resource Economics Society.
    3. 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.
    4. 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.
    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. Nichols, Rachel & Yamazaki, Satoshi & Jennings, Sarah, 2018. "The Role of Precaution in Stock Recovery Plans in a Fishery with Habitat Effect," Ecological Economics, Elsevier, vol. 146(C), pages 359-369.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
    12. 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.
    13. Colin D Buxton & Klaas Hartmann & Robert Kearney & Caleb Gardner, 2014. "When Is Spillover from Marine Reserves Likely to Benefit Fisheries?," PLOS ONE, Public Library of Science, vol. 9(9), pages 1-7, September.
    14. Sarkar, Sudipto, 2009. "Optimal fishery harvesting rules under uncertainty," Resource and Energy Economics, Elsevier, vol. 31(4), pages 272-286, November.
    15. 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.
    16. repec:gam:jsusta:v:8:y:2016:i:5:p:437:d:69338 is not listed on IDEAS

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    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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