Renewable resource management with environmental prediction

Christopher Costello, Stephen Polasky, Andrew Solow

Research output: Contribution to journalArticlepeer-review

34 Scopus citations

Abstract

Variations in environmental conditions affect renewable resource growth. The ability to predict such variations is improving, providing scope for improved management. We generalize a common stochastic stock recruitment model to explore how optimal management changes with environmental prediction. We obtain three main results. First, while it might seem that a prediction of adverse future conditions should lead to more conservative management, the opposite may be true. Second, optimal management requires only a one-period-ahead forecast, suggesting forecast accuracy is more important than forecast lead time. Finally, we derive conditions on environmental fluctuations guaranteeing positive optimal harvest in every period.

Original languageEnglish (US)
Pages (from-to)196-211
Number of pages16
JournalCanadian Journal of Economics
Volume34
Issue number1
DOIs
StatePublished - Jan 1 2001

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