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Renewable Resources Reading Perman et al (2 nd ed.) Chapters 9 and 10 Perman et al (3 rd ed.) Chapters 17 and 18

Renewable Resources Reading Perman et al (2 nd ed.) Chapters 9 and 10 Perman et al (3 rd ed.) Chapters 17 and 18. Renewable flow resources Such as solar, wave, wind and geothermal energy. These energy flow resources are non-depletable.

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Renewable Resources Reading Perman et al (2 nd ed.) Chapters 9 and 10 Perman et al (3 rd ed.) Chapters 17 and 18

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  1. Renewable Resources • Reading • Perman et al (2nd ed.) Chapters 9 and 10 • Perman et al (3rd ed.) Chapters 17 and 18

  2. Renewable flow resources • Such as solar, wave, wind and geothermal energy. • These energy flow resources are non-depletable. • But entail costs in harnessing them as usable energy resources

  3. Renewable stock resources • living organisms: fish, cattle and forests, with a natural capacity for growth • inanimate systems (such as water and atmospheric systems): reproduced through time by physical or chemical processes • arable and grazing lands as renewable resources: reproduction by biological processes (such as the recycling of organic nutrients) and physical processes (irrigation, exposure to wind etc.). • Are capable of being fully exhausted.

  4. Biological growth processes G = G(S) An example: (simple) logistic growth: Where g is the intrinsic growth rate (birth rate minus mortality rate) of the population.

  5. Figure 17.2 Steady-state harvests.

  6. Commercial fisheries Open access vs Restricted access fisheries What is an open access fishery? Consequences of open access: entry continues until all rents are dissipated (profit per boat = zero). Stock sizes will tend to be lower, and harvest rates will tend to be higher (but may not always be) compared with a restricted access (“private property” or “common property”) fishery. Exhaustion or even extinction is more likely, but will not necessarily happen.

  7. Switch now to “Model Equations” document

  8. HMSY = eEMSYS H1 = eE1S H2 = eE2S H2 H1 G(S) S1 SMSY =SMAX/2 S2 S Figure 17.3 Steady state equilibrium fish harvests and stocks at various effort levels.

  9. HPP H=(w/P)E HOA EOA g/e EPP E Figure 17.4 Steady state equilibrium yield-effort relationship.

  10. Figure 17.5 Stock and effort dynamic paths for the illustrative model.

  11. Figure 17.6 Phase-plane analysis of stock and effort dynamic paths for the illustrative model.

  12. G(S) Slope = i Slope = i - [-(C/S)/P] SPV SPV* S Figure 17.7 Present value maximising fish stocks with and without dependence of costs on stock size, and for zero and positive interest rates.

  13. OPEN ACCESS AND SPECIES EXTINCTION • The extinction of renewable resource stocks is a possibility in conditions of open access, but open access does not necessarily result in extinction of species. • Open access enhances the likelihood of catastrophic outcomes because: • Incentives to conserve stocks for the future are very weak. • Free riding once a bargain has been struck • Crowding diseconomy effects

  14. EXCESSIVE HARVESTING AND SPECIES EXTINCTION • There are many reasons why human behaviour may cause population levels to fall dramatically or, in extreme cases, cause species extinction. These include: • Even under restricted private ownership, it may be ‘optimal’ to the owner to harvest a resource to extinction. Clark (1990) demonstrates, however, that this is highly improbable. • Ignorance of or uncertainty about current and/or future conditions results in unintended collapse or extinction of the population. • Shocks or disturbances to the system push populations below minimum threshold population survival levels.

  15. WHATEVER THE REGIME, SPECIES EXTINCTION IS MORE LIKELY: • the higher is the market (gross) resource price of the resource • the lower is the cost of harvesting a given quantity of the resource • the more that market price rises as the catch costs rise or as harvest quantities fall • the lower the natural growth rate of the stock, and the lower the extent to which marginal extraction costs rise as the stock size diminishes • the higher is the discount rate • the larger is the critical minimum threshold population size relative to the maximum population size.

  16. Renewable resources policy • Command-and-control: • Quantity restrictions on catches (EU Total Allowable Catches) • Fishing season regulations • Technical restrictions on the equipment used - for example, restrictions on fishing gear, mesh or net size, or boat size. • Incentive-based policies: • Restrictions on open access/property rights • Fiscal incentives • Establishment of forward or futures markets • Marketable permits (‘individual transferable quotas’, ITQ)

  17. Forestry As far as forests as sources of timber are concerned, much of the previous analysis applies. But a new issue arises: the average length of a “rotation”. What is also important here is the multiple service functions of much forestry. This can often extend optimal rotation lengths.

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