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

Ute Kapaun and Martin Quaas

No 2012-09, Economics Working Papers from Christian-Albrechts-University of Kiel, Department of Economics

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.

Keywords: fishery economics; environmental uncertainty; constant escapement; risk aversion; prudence (search for similar items in EconPapers)
JEL-codes: Q22 Q57 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-env and nep-upt
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Related works:
Journal Article: Does the Optimal Size of a Fish Stock Increase with Environmental Uncertainties? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cauewp:201209

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