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Risk, restrictive quotas, and income smoothing

Author

Listed:
  • Schaap, Robbert-Jan
  • Gonzalez-Poblete, Exequiel
  • Silva Aedo, Karin Loreto
  • Diekert, Florian

Abstract

Income shocks due to environmental variability, climatic events or overexploitation can result in severe hardships for natural resource users which are unable to smooth consumption. Artisanal fishers in Chile vary in their ability to smooth consumption due to regulatory differences. Utilizing these regulatory differences, we find that survey participants that harvest species which are governed by restrictive quotas have preferences for more precautionary savings compared to survey participants whose harvest is not restricted. The inability to adjust harvest increases the importance of self-insurance through saving. Especially in developing countries, where formal saving opportunities are limited, policies that aim at stabilizing resource productivity through restrictive quotas need to account for available consumption smoothing strategies to avoid unintended welfare losses.

Suggested Citation

  • Schaap, Robbert-Jan & Gonzalez-Poblete, Exequiel & Silva Aedo, Karin Loreto & Diekert, Florian, 2024. "Risk, restrictive quotas, and income smoothing," Ecological Economics, Elsevier, vol. 225(C).
    • Handle: RePEc:eee:ecolec:v:225:y:2024:i:c:s0921800924002167
    DOI: 10.1016/j.ecolecon.2024.108319
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    More about this item

    Keywords

    Bioeconomics; Labour flexibility; Property rights; Higher order risk preferences; Precautionary saving; Fisheries;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery

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