The optimal management of renewable resources under the risk of potential regime shift

Bijie Ren and Stephen Polasky

Journal of Economic Dynamics and Control, 2014, vol. 40, issue C, 195-212

Abstract: Complex dynamic systems can undergo changes in feedbacks between system components causing a rapid and persistent shift in system behavior (“regime shifts”), and potentially reduce welfare from declining provision of important ecosystem services. In this paper, we provide an analytical condition that determinfilefs whether the threat of a potential regime shift causes management to be more aggressive or more precautionary. In numerical simulations we find that aggressive management can occur for reasonable parameter values, which is counter prior results that the potential for harmful regime shift always leads to precautionary management.

Keywords: Optimal management; Uncertainty; Growth; Renewable resources; Regime shift (search for similar items in EconPapers)
JEL-codes: O44 Q01 Q20 Q57 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (41)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:40:y:2014:i:c:p:195-212

DOI: 10.1016/j.jedc.2014.01.006

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