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The optimal management of renewable resources under the risk of potential regime shift. (English) Zbl 1402.91552
Summary: 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.

MSC:
91B76 Environmental economics (natural resource models, harvesting, pollution, etc.)
Software:
CompEcon
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