The optimal management of renewable resources under the risk of potential regime shift |
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Affiliation: | 1. Department of Economics, New York University, New York (NY), USA, NBER, and CEPR;2. Department of Economics, Vanderbilt University, Nashville (TN), USA;1. Bren School, 4410 Bren Hall, Santa Barbara, CA 93117, United States;2. NBER, United States;3. CNRS, UMR 5474 LAMETA, F-34000 Montpellier, France;4. Aix-Marseille University (Aix-Marseille School of Economics): CNRS &EHESS, Centre de la Vieille Charité, 2 rue de la charité, F-13002 Marseille, France |
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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. |
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Keywords: | Optimal management Uncertainty Growth Renewable resources Regime shift |
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