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

  • Kapaun, Ute
  • Quaas, Martin F.

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.

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Paper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2012-09.

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Date of creation: 2012
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Handle: RePEc:zbw:cauewp:201209
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  5. De Zeeuw, A. & Polasky, S. & Wagener, F.O.O., 2010. "Optimal Management with Potential Regime Shifts," CeNDEF Working Papers 10-10, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
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  7. Singh, Rajesh & Weninger, Quinn & Doyle, Matthew, 2006. "Fisheries Management with Stock Growth Uncertainty and Costly Capital Adjustment," Staff General Research Papers 12765, Iowa State University, Department of Economics.
  8. Steffen Andersen & Glenn W. Harrison & Morten I. Lau & E. Elisabet Rutström, 2008. "Eliciting Risk and Time Preferences," Econometrica, Econometric Society, vol. 76(3), pages 583-618, 05.
  9. 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.
  10. Costello, Christopher & Polasky, Stephen, 2008. "Optimal harvesting of stochastic spatial resources," Journal of Environmental Economics and Management, Elsevier, vol. 56(1), pages 1-18, July.
  11. 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.
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  14. 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 Environmental and Business Economics.
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