Does the Optimal Size of a Fish Stock Increase with Environmental Uncertainties?
- Ute KapaunAffiliated withDepartment of Economics, University of Kiel Email author
- , Martin F. QuaasAffiliated withDepartment of Economics, University of Kiel
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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.
KeywordsFishery economics Environmental uncertainty Constant escapement Risk aversion Prudence
JEL ClassificationQ22 Q57
- Does the Optimal Size of a Fish Stock Increase with Environmental Uncertainties?
Environmental and Resource Economics
Volume 54, Issue 2 , pp 293-310
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- Print ISSN
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- Springer Netherlands
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- Fishery economics
- Environmental uncertainty
- Constant escapement
- Risk aversion
- Industry Sectors