Optimal exploitation of renewable resources under uncertainty and the extinction of species

Tapan Mitra and Santanu Roy

Economic Theory, 2006, vol. 28, issue 1, 23 pages

Abstract: We consider an optimally managed renewable resource with stochastic non-concave growth function. We characterize the conditions under which the optimal policy leads to global extinction, global conservation and the existence of a safe standard of conservation. Our conditions are specified in terms of the economic and ecological primitives of the model: the biological growth function, the welfare function, the distribution of shocks and the discount rate. Our results indicate that, unlike deterministic models, extinction and conservation in stochastic models are not determined by a simple comparison of the growth rate and the discount rate; the welfare function plays an important role. Copyright Springer-Verlag Berlin/Heidelberg 2006

Keywords: Renewable resources; Extinction; Biological species; Safe standard of conservation; Optimal resource management; Stochastic dynamic programming. (search for similar items in EconPapers)
Date: 2006
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Working Paper: Optimal Exploitation of Renewable Resources under Uncertainty and the Extinction of Species (2003)
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DOI: 10.1007/s00199-005-0618-5

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