The Valuation of Fisheries Rights: A Real Options Approach

Jose Pizarro and Eduardo S. Schwartz

No 25140, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This article develops and implements a Real Option approach to value renewable natural resources in the case of Marine Fisheries. The model includes two sources of uncertainty: the resource biomass and the price of fish, and it can be used by fisheries to optimally adapt their harvesting strategy to changing conditions in these stochastic variables. The model also features realistic operational cash flows and fisheries can shutdown and reopen operations. Using publicly available data on the British Columbia halibut fishery, the required parameters are estimated and the model solved. The results indicate that the conservation of the biomass is both optimal from a financial and a social perspective. The approach could be extended to other fish species and natural resources if the appropriate data were available.

JEL-codes: G10 G13 G31 Q20 Q22 (search for similar items in EconPapers)
Date: 2018-10
New Economics Papers: this item is included in nep-agr, nep-cfn and nep-env
Note: AP
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Citations: View citations in EconPapers (2)

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