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Does the optimal size of a fish stock increase with environmental uncertainties?

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  • Kapaun, Ute
  • Quaas, Martin F.

Abstract

We analyze the effect of environmental uncertainties on optimal fishery management in a bio-economic fishery model. Unlike most of the literature on resource economics, but in line with ecological models, we allow the different biological processes of survival and recruitment to be affected differently by environmental uncertainties. We show that the overall effect of uncertainty on the optimal size of a fish stock is ambiguous, depending on the prudence of the value function. For the case of a risk-neutral fishery manager, the overall effect depends on the relative magnitude of two opposing effects, the 'convex-cost effect' and the 'gambling effect'. We apply the analysis to the Baltic cod and the North Sea herring fisheries, concluding that for risk neutral agents the net effect of environmental uncertainties on the optimal size of these fish stocks is negative, albeit small in absolute value. Under risk aversion, the effect on optimal stock size is positive for sufficiently high coefficients of constant relative risk aversion.

Suggested Citation

  • Kapaun, Ute & Quaas, Martin F., 2012. "Does the optimal size of a fish stock increase with environmental uncertainties?," Economics Working Papers 2012-09, Christian-Albrechts-University of Kiel, Department of Economics.
  • Handle: RePEc:zbw:cauewp:201209
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    References listed on IDEAS

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    5. Singh, Rajesh & Weninger, Quinn & Doyle, Matthew, 2006. "Fisheries management with stock growth uncertainty and costly capital adjustment," Journal of Environmental Economics and Management, Elsevier, vol. 52(2), pages 582-599, September.
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    9. Quaas, Martin F. & Requate, Till & Ruckes, Kirsten & Skonhoft, Anders & Vestergaard, Niels & Voss, Rudi, 2013. "Incentives for optimal management of age-structured fish populations," Resource and Energy Economics, Elsevier, vol. 35(2), pages 113-134.
    10. Lone Grønbæk Kronbak, 2002. "The Dynamics of an Open Access: The case of the Baltic Sea Cod Fishery - A Strategic Approach -," Working Papers 31/02, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
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    14. Christine Roeckmann & Uwe A. Schneider & Michael A. St.John & Richard S.J. Tol, 2005. "Rebuilding the Eastern Baltic cod stock under environmental change - a preliminary approach using stock, environmental, and management constraints," Working Papers FNU-84, Research unit Sustainability and Global Change, Hamburg University, revised Dec 2005.
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    Citations

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    Cited by:

    1. François Libois, 2016. "Success and Failure of Communities Managing Natural Resources:Static and Dynamic Inefficiencies," Working Papers 1601, University of Namur, Department of Economics.
    2. Martin F. Quaas & Ralph Winkler, 2017. "A Market Mechanism for Sustainable and Efficient Resource Use under Uncertainty," CESifo Working Paper Series 6524, CESifo Group Munich.
    3. Costello, Christopher & Quérou, Nicolas & Tomini, Agnes, 2015. "Partial enclosure of the commons," Journal of Public Economics, Elsevier, vol. 121(C), pages 69-78.
    4. Christopher Costello & Bruno Nkuiya & Nicolas Querou, 2017. "Extracting spatial resources under possible regime shift," Working Papers 17-07, LAMETA, Universtiy of Montpellier.
    5. Christopher Costello & Nicolas Querou & Agnès Tomini, 2014. "Spatial concessions with limited tenure," Post-Print hal-01123392, HAL.
    6. Christopher Costello & Bruno Nkuiya & Nicolas Querou, 2017. "Extracting spatial resources under possible regime shift," Working Papers 17-07, LAMETA, Universtiy of Montpellier.
    7. Julia Hoffmann & Martin Quaas, 2016. "Common Pool Politics and Inefficient Fishery Management," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(1), pages 79-93, January.

    More about this item

    Keywords

    fishery economics; environmental uncertainty; constant escapement; risk aversion; prudence;

    JEL classification:

    • 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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