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Optimal grazing management rules in semi-arid rangelands with uncertain rainfall

Author

Listed:
  • Martin F. Quaas

    () (Department of Economics, University of Kiel, Germany)

  • Stefan Baumgärtner

    () (Department of Sustainability Sciences and Department of Economics, Leuphana University of Lüneburg, Germany)

Abstract

We study optimal adaptive grazing management under uncertain rainfall in a discrete-time model. As in each year actual rainfall can be observed during the short rainy season, and grazing management can be adapted accordingly for the growing season, the closed-loop solution of the stochastic optimal control problem does not only depend on the state variable, but also on the realization of the random rainfall. This distinguishes optimal grazing management from the optimal use of most other natural resources under uncertainty, where the closed-loop solution of the stochastic optimal control problem depends only on the state variables. Solving this unusual stochastic optimization problem allows us to critically contribute to a long-standing controversy over how to optimally manage semi-arid rangelands by simple rules of thumb.

Suggested Citation

  • Martin F. Quaas & Stefan Baumgärtner, 2011. "Optimal grazing management rules in semi-arid rangelands with uncertain rainfall," Working Paper Series in Economics 193, University of Lüneburg, Institute of Economics.
  • Handle: RePEc:lue:wpaper:193
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    Citations

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    Cited by:

    1. Müller, Birgit & Quaas, Martin F. & Frank, Karin & Baumgärtner, Stefan, 2011. "Pitfalls and potential of institutional change: Rain-index insurance and the sustainability of rangeland management," Ecological Economics, Elsevier, vol. 70(11), pages 2137-2144, September.
    2. repec:nbr:nberch:13950 is not listed on IDEAS
    3. Roland Olbrich & Martin F. Quaas & Stefan Baumgärtner, 2014. "Personal Norms of Sustainability and Farm Management Behavior," Sustainability, MDPI, Open Access Journal, vol. 6(8), pages 1-28, August.
    4. Roland Olbrich & Martin F. Quaas & Stefan Baumgaertner, 2011. "Personal norms of sustainability and their impact on management – The case of rangeland management in semi-arid regions," Working Paper Series in Economics 209, University of Lüneburg, Institute of Economics.

    More about this item

    Keywords

    environmental risk; risk management; stochastic optimal control; grazing management; rules of thumb;

    JEL classification:

    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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