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Incentives to give up resource extraction and avoid the tragedy of the commons

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Abstract

This paper develops a general model of common resource extraction where we introduce payments for environmental services to encourage resource users to give up extraction. The goal is to reach a balance between resource use and conservation. As the essence of conservation is dynamic, we use a dynamic model to study the implementation of the compensation scheme. A stable heterogeneous equilibrium can be reached where both extractors and non-extractors live together. We analyze how the success of the compensation depends on factors such as the elasticity of demand and the biological characteristics of the resource.

Suggested Citation

  • Juan Miguel Benito-Ostolaza & Nuria Osés-Eraso, 2013. "Incentives to give up resource extraction and avoid the tragedy of the commons," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 1305, Departamento de Economía - Universidad Pública de Navarra.
  • Handle: RePEc:nav:ecupna:1305
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    File URL: ftp://ftp.econ.unavarra.es/pub/DocumentosTrab/DT1305.PDF
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    References listed on IDEAS

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    1. Oses-Eraso, Nuria & Viladrich-Grau, Montserrat, 2007. "On the sustainability of common property resources," Journal of Environmental Economics and Management, Elsevier, vol. 53(3), pages 393-410, May.
    2. Brian R. Copeland & M. Scott Taylor, 2009. "Trade, Tragedy, and the Commons," American Economic Review, American Economic Association, vol. 99(3), pages 725-749, June.
    3. M. Scott Taylor, 2009. "Innis Lecture: Environmental crises: past, present, and future," Canadian Journal of Economics, Canadian Economics Association, vol. 42(4), pages 1240-1275, November.
    4. Pagiola, Stefano, 2008. "Payments for environmental services in Costa Rica," Ecological Economics, Elsevier, vol. 65(4), pages 712-724, May.
    5. Engel, Stefanie & Pagiola, Stefano & Wunder, Sven, 2008. "Designing payments for environmental services in theory and practice: An overview of the issues," Ecological Economics, Elsevier, vol. 65(4), pages 663-674, May.
    6. Sethi, Rajiv & Somanathan, E, 1996. "The Evolution of Social Norms in Common Property Resource Use," American Economic Review, American Economic Association, vol. 86(4), pages 766-788, September.
    7. Wunder, Sven & Engel, Stefanie & Pagiola, Stefano, 2008. "Taking stock: A comparative analysis of payments for environmental services programs in developed and developing countries," Ecological Economics, Elsevier, vol. 65(4), pages 834-852, May.
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    More about this item

    Keywords

    common resource; overcapacity; payment for environmental ser- vices; compensation; replicator dynamics;

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q29 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Other
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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