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Uncertainty and Amenity Values in Renewable Resource Economics

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  • Gilles Lafforgue

Abstract

In this paper, we study the effects of amenities and uncertainty on the optimal exploitation of a renewable resource. First, if society displays a protection motive (in the presence of amenities), its optimal harvesting strategy will be more conservative. Second, we show that ecological uncertainty leads society to develop the opposite behavior, thus reducing its exposition towards risk. A stationary analysis is undertaken to analytically quantify and compare these two effects. With a Gompertz natural regeneration function and a proportional risk, the amenity effect is proved to prevail if and only if stochastic fluctuations on the resource stock are not too large. Copyright Springer 2005

Suggested Citation

  • Gilles Lafforgue, 2005. "Uncertainty and Amenity Values in Renewable Resource Economics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(3), pages 369-383, July.
    • Handle: RePEc:kap:enreec:v:31:y:2005:i:3:p:369-383
    DOI: 10.1007/s10640-005-1671-z
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    Cited by:

    1. Susanne Soretz, 2007. "Efficient Dynamic Pollution Taxation in an Uncertain Environment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 36(1), pages 57-84, January.
    2. Rob Aalbers, 2009. "Discounting investments in mitigation and adaptation: a dynamic stochastic general equilibrium approach of climate change," CPB Discussion Paper 126, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Fesselmeyer, Eric & Santugini, Marc, 2013. "Strategic exploitation of a common resource under environmental risk," Journal of Economic Dynamics and Control, Elsevier, vol. 37(1), pages 125-136.
    4. Isabel Almudi & Julio Sánchez Chóliz, 2011. "Sustainable use of renewable resources: an identity approach," Journal of Bioeconomics, Springer, vol. 13(2), pages 97-123, July.
    5. Orlov, Sergey & Rovenskaya, Elena, 2022. "Optimal transition to greener production in a pro-environmental society," Journal of Mathematical Economics, Elsevier, vol. 98(C).

    More about this item

    Keywords

    amenities; renewable resources; ecological uncertainty; risk exposition; stationary distributions; Q20; D81; C61;
    All these keywords.

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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