Resource Management with Stochastic Recharge and Environmental Threats

Arie Leizarowitz and Yacov Tsur

No 52784, Discussion Papers from Hebrew University of Jerusalem, Department of Agricultural Economics and Management

Abstract: Exploitation diminishes the capacity of renewable resources to with-stand environmental stress, increasing their vulnerability to extreme conditions that may trigger abrupt changes. The onset of such events depends on the coincidence of extreme environmental conditions (environmental threat) and the resource state (determining its resilience). When the former is uncertain and the latter evolves stochastically, the uncertainty regarding the event occurrence is the result of the combined effect of these two uncertain components. We analyzed optimal resource management in such a setting. Existence of an optimal stationary policy is established and long run properties are characterized. A numerical illustration based on actual data is presented.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Date: 2009-08
New Economics Papers: this item is included in nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ags:huaedp:52784

DOI: 10.22004/ag.econ.52784

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