Renewable Resource Stocks Research Articles

The analysis of trade liberalization on open-access shared renewable resources with pollution: A small open economy case

Trade liberalization is discussed to likely result in resource depletion and utility losses, indirectly diminishing productivity levels via the cross-border impact of economic activities. However, existing studies generally focus on nationally-owned domestic resource stocks, failing to assess the cross-border influence of internationally shared renewable resources under the condition that harvesting and manufacturing industries yield environmental pressures detrimentally impacting the common stock. This paper intends to study the impacts of trade liberalization on welfare grounds, resource protection, and labor allocation in a two-country, two-good small open-economy model when two countries share a common renewable resource stock. Depending on the different levels of harvesting technology, the countries can be divided into two groups: a country where the open-access problem dominates the industrial pollution, and the opposite applies for the other country. The results indicate that trade may cause welfare gains for both countries when they show full specialization in manufacturing goods of a comparative advantage, even if the shared resource stocks are severely depleted. Furthermore, based on the common resource stock assumption, we demonstrate that it cannot be optimal for a country to specialize in its respective “cleaner” goods from a welfare perspective. The reason is that only one country's specialization in its respective “dirtier” goods can be sufficient to reverse the welfare and conservation results in both countries adversely. Strikingly, the findings recommend that international cooperation is likely to happen if both countries specialize in resource goods rather than in pollution-producing goods.

Time-consistent renewable resource management with present bias and regime shifts

We investigate the extraction plan of present-biased decision makers managing a renewable resource stock whose growth is uncertain and which could undergo a rapid and significant change when stock falls below a threshold. We show that the Markov-Nash equilibrium extraction policy is unique, time consistent, and increasing in resource stock. An increase in the threshold leads to increased resource extraction, rather than the precautionary reduction in extraction often observed with exponential discounting. An increase in the degree of present bias also leads to an increase in resource extraction. Our analysis suggests that accounting for and appropriately dealing with resource managers’ present bias may be important to understand resource use sustainability.

Shareholder invisível: uma perspectiva teórica da relação entre capital natural, negócios e sociedade

Abstract The term “natural capital” originated in the field of economics but has gained increasing prominence in accounting in recent years. Natural capital is the stock of renewable or non-renewable natural resources that benefit both society and businesses, providing value through ecosystem services. This essay proposes the theoretical perspective of the invisible shareholder, highlighting the often unacknowledged contribution of society as a supplier of natural capital to businesses. This perspective is grounded in the following observations: a) natural capital arises from the natural resources that constitute our natural heritage, b) the combination of these resources contributes to the value creation of businesses, and c) accounting disclosures typically do not account for society’s participation in the value generated by businesses The study examines the relationship between natural capital, business, and society based on aspects associated with ownership and control, the contribution of natural capital in the business value creation process, and the elements that involve disclosing this relationship in accounting.

Present Bias in Renewable Resource Management and Agent’s Welfare

This article analyses the effects of myopic and present-biased preferences on the welfare of a naive agent when he/she is engaged in an intertemporal harvesting activity from a stock of renewable resources. The analysis is conducted by also taking into account the nature of present-biased behaviours as phenomena that is derived from a dual system of discounting and of response to short and long-term stimuli. In the task of harvesting from a stock of renewable resources, the present biased preferences of a naive agent create a conflict between the long-run benefit of the agent and the short-run desire. Thus, this article demonstrates and argues that in the decision-making, which involves intertemporal choices in renewable resources management, the prevalence of naive behaviour, strongly influenced by the emotional-affective system, can lead to a reduction in the overall utility enjoyed by the individual due to the present bias. JEL: D15, D90, Q20

Stability of international fisheries agreements under stock growth uncertainty

Scientific evidence reveals that renewable resource stock dynamics are subject to uncertainty due to changes in environmental conditions. Despite its critical impacts on management, little is known about the effects of such uncertainty on the formation of regional fisheries management organizations (RFMOs). In this paper, we design a dynamic stock recruitment framework to examine this issue in a common pool setting. We find that stock growth uncertainty critically affects equilibrium behaviors under both open loop membership and dynamic membership. For instance, we delineate conditions under which uncertainty induces full non-cooperation in equilibrium. Strategic behaviors may also shift equilibrium outcomes from full non-cooperation under deterministic conditions to full cooperation under uncertainty when countries anticipate a small environmental variability. Moreover, strategic interactions to extract the resource stock may lead to higher individual payoffs under uncertainty. We also outline the differences in equilibrium responses of membership, harvest, and payoff to mean preserving spreads under both open loop membership and dynamic membership.

Assessing impacts to biodiversity and ecosystems: understanding and exploiting synergies between Life Cycle Assessment and Natural Capital Accounting

All economic activity depends on natural capital, i.e., the stock of both renewable and non-renewable resources (including biodiversity) providing a flow of ecosystem services (ES) to society. However, as also highlighted in the European Green Deal and follow-up policy initiatives of the European Commission, unsustainable practices of production and consumption of human beings have put nature in crisis, which has negative effects on different aspects of human wellbeing as retro-feedback. The need for action is urgent, and this calls for the availability of appropriate methods and tools that can be used to assess and guide the mitigation and reversion of the impacts of human activities on biodiversity and ES. In this context, we describe a conceptual framework that aims to show how Life Cycle Assessments (LCA) and Natural Capital Accounting (NCA) can be integrated and used for a more comprehensive understanding of the biodiversity and ES quality footprint, i.e., pressures and impacts, associated with product value chains, organizations and territories. First, an in-depth and separate description of LCA and NCA is provided, including ongoing progress, complexities, and challenges of each field. Second, integration options are presented that could be followed and further developed to link LCA and NCA, thus helping to overcome the shortages of the two fields and providing a more holistic and interdisciplinary approach to address the current environmental crisis.

Research on the path of agriculture sustainable development based on the concept of circular economy and big data

ABSTRACT In order to improve the reliability and scientificity of the path of agriculture sustainable development, guided by the concept of circular economy, this paper combines data mining technology to construct a path analysis system of agricultural sustainable development and establishes a one-dimensional discrete dynamic model of the interaction between the stock of renewable resources and the output. Moreover, this paper discusses the impact of resource-based industries’ output on the sustainable use of resources and establishes a two-dimensional discrete dynamic control model for resource stock and resource development speed. In addition, this paper mainly studies the relationship between resource stock and output when the speed of resource development is managed and controlled, and builds a system structure model based on the actual needs of agricultural development. Finally, this paper designs an experiment to analyse the performance of the system model constructed in this paper. The research results show that the system constructed in this paper has a certain guiding effect on the sustainable development of agriculture, and it can be applied to practice.

Present Bias in Renewable Resources Management Reduces Agent's Welfare

This paper analyses the effects of myopic and present-biased preferences on the welfare of a naive agent when she is engaged in an intertemporal harvesting activity from a stock of renewable resources. The analysis is conducted by taking into account also the nature of present-biased behaviors as phenomena that is derived from a dual system of discounting and of response to short and long-term stimuli. In the task of harvesting from a stock of renewable resources, the present biased preferences of a naive agent create a conflict between the long run benefit of the agent and the short run desire. Thus, this paper demonstrates and argues that in the decision-making, which involves intertemporal choices in renewable resources management, the prevalence of naive behavior, strongly influenced by the emotional-affective system, can lead to a reduction in the overall utility enjoyed by the individual due to the present bias.

Capital Investment for Optimal Exploitation of Renewable Resource Stocks in the Age of Global Change

The world is rapidly changing, and biotic resources and their users are adapting. Determining how ecological and economic interactions determine the outcomes of this adaptation is critical to understanding the future of natural resources. We model a two-species fisheries as a stylized system to investigate the adaptation strategies of a harvester faced with shifting species composition in an ecological community. We explore how interspecies interactions and pricing effects jointly determine the optimal adaptation strategy. We consider two interacting species that are harvested jointly, but where the harvester may exert effort towards each species differentially provided she invests in reproducible capital that allows targeting. The possible adaptation strategies comprise changes in how people interact with natural capital (for example, changing harvest levels) and investment in reproducible or human capital, which may be a substitute or complement for natural capital stocks. We find that the market price of the harvested species exerts a particularly strong impact on the adaptation strategy; all else equal, unequal prices tends to drive extreme targeting or avoidance of a new species. Economic and ecological factors can necessitate investment at equilibrium, and early, transient management decisions for beneficial species may, like with nuisance species, produce large benefits.

Environmental income in economic growth of a large open economy for the era of eco-urbanization

Purpose The purpose of this paper is to show that the environmental income drives economic growth of a large open country. Design/methodology/approach The authors detect that the relative environmental income has double effect of “conspicuous consumption” on the international renewable resource stock changes when a new social norm shapes to environmental-friendly behaviors by using normal macroeconomic approaches. Findings Every unit of extra demand for renewable resource consumption increases the net premium of domestic capital asset. Even if the technology spillovers are inefficient to the substitution of capital to labor force in a real business cycle, the relative income with scale effect increases drives savings to investment. In this case, the renewable resource consumption promotes both the reproduction to a higher level and saving the potential cost of environmental improvement. Even if without scale effects, the loss of technology inefficient can be compensated by net positive consumption externality for economic growth in a sustainable manner. Research limitations/implications It implies how to earn the environment income determines the future pathway of China’s rural conversion to the era of eco-urbanization. Originality/value We test the tax incidence to demonstrate an experimental taxation for environmental improvement ultimately burdens on international consumption side.

Nurturing natural capital

Nurturing natural capital

Fish Trade Liberalization Under 21st Century Trade Agreements: The CETA and Newfoundland and Labrador Fish and Seafood Industry

Both classical (Ricardo) and neo-classical (Heckscher-Ohlin) theories of international trade assume that free trade results in welfare gains for all involved. A more recent literature dedicated to liberalization of trade in renewable resources finds that welfare effects depend on certain factors, such as the country's status as importer or exporter, the state of the renewable resource stocks and the size of the country on the world market (Chichilnisky, 1993; Brander and Taylor, 1997a; Emami and Johnston, 2000, Hannesson, 2000), or remain theoretically indeterminate and require empirical analysis (Nielsen, 2009).Fish trade liberalization is provided in the Comprehensive Economic and Trade Agreement (CETA) concluded by the Canadian Government in 2013 with the European Union (EU). This new type of “21st century” trade agreement challenges both the conventional theory of international trade and renewable resource-based sectors of economic activity such as fish and seafood by opening them up to industrial-type international competition and integration. The paper uses the theoretical framework of ecological economics (Costanza et al., 2015) to demonstrate that the declining Newfoundland and Labrador (NL) fish and seafood industry is not ready to participate gainfully in implementation of the CETA. It also uses the concept of “policy space” (Rodrik 2007, Pauwelyn 2008) to recommend some policy changes that can prepare the NL fish and seafood sector for competitive and beneficial participation in the CETA. Restructuring the fish and seafood sector with a focus on small scale, elimination of harmful subsidies and redirecting them to achieve lower costs of operation, better trained labor force, and more just and sustainable supply/marketing networks, will make it fit to benefit from the gains from trade and to contribute to a more equitable distribution of the benefits of the fishery to the fishers and local communities.

AkiraYakitaPopulation Aging, Fertility and Social SecuritySpringer International, 2017. xvii + 237 p. $129.00.

Readers should not be misled by the straightforward title of this book into expecting a broadly accessible discussion of problems of social support in aging, low-fertility societies. Some of those issues are taken up, but the treatment throughout is at a purely abstract level. Indeed, the book is remarkable in sustaining this high level of formality throughout. In this respect it is comparable to but even more purist than David de la Croix's Fertility, Education, Growth, and Sustainability (Cambridge, 2013—see PDR 39, no. 4). The starting point of most chapters is the classic Samuelson consumption–loan model formulation, a two-period, one-sex, overlapping-generations framework. In the first period, individuals work and have and bring up children; in the second, if they survive into it, they are retired. They choose a lifetime consumption profile and level of childbearing to maximize (expected) lifetime utility, subject to their budget constraint. A longer life expectancy induces them to save more for retirement and have fewer children, thus promoting economic growth and fertility transition. Introducing an unfunded PAYG pension scheme leads to lower savings. If age of retirement is left to individual choice, those with higher earning capacity tend to have more children and work further into old age. Other complications in the fertility calculus come from adding a market in childcare services. Individuals who have fewer children than are needed on average to support PAYG pensions can be seen as free-riders—and doubly benefit by forgoing less income in childcare time or expense. A fuller treatment of age structure and human capital requires expanding to a three-period model, the first period now devoted to education. Youth dependency is found mostly to be inversely related to growth in total factor productivity (the demographic dividend argument), but at very low incomes the returns to educational investment can be sufficiently high to crowd out investment in technological innovation, yielding falling productivity—a poverty trap, or even, in Yakita's term, a rat hole. Topics touched on in other chapters include the effects of population aging on public investment and on the sustainable stock of renewable resources. A concluding chapter restates the results seriatim. The analytical prowess on display is undeniable. Tractability imposes some limitations: most of the analysis is confined to steady states, leaving aside transitional situations, and the economies in all but one chapter are closed, abstracting from international factor and product flows; gender differences, ex hypothesi, are ruled out. What is most lacking, however, is any serious discussion of how the modeling relates to the real world—to what degree the particular features of the economy and demography captured in the successive model variants are those that are in fact salient in governing outcomes or that shed light on what is actually going on behind the scenes. The author is content to point out where his findings agree with or differ from those of other theorists (whose work is extensively cited), and to express satisfaction when he qualitatively reproduces an accepted empirical observation or stylized fact. The book exemplifies a well-established genre of formal economic demography and public economics familiar in the pages of the Journal of Population Economics and other theoretically inclined economics journals—where many of the chapters in fact originated. But in those journals there is more than a sprinkling of empirical material to balance the contents; here there is not. The author is an economist at Nanzan University, Nagoya. Chapter bibliographies.

Renewable Resource Stock, Relative Income, and Consumption Externalities in a Large Open Economy

Renewable resource stock changes are determined by marginal consumption utility for future production. The expected utility is highly affected by the gap between different discount rates on individual’s utility maximization and various social welfare optimal level. In a large economy with big international trade, we show that sustainable development fails to be sustained without social production at a certain level dynamically. Only if the growth rate of theoretical innovation and capital accumulation is faster than the speed of renewable resource stock accumulation, the discounted value of renewable resource can be offset. In this dynamic process, when a share of environmental income exists, some renewable resource with distinguished regional characteristics cannot be perfectly substituted. Thus, the relationship between social subjective time preference of international consumers and the structural growth of economic production factors is argued by the fuzzy hypothesis of Environmental Kuznets Curve (EKC). If we consider international resource consumption utility is proportionally driven by the relative income due to the inertia of “conspicuous consumption”, we show that consumption choice on every unit of renewable resource is deterministically affected by relative capital income and premium of every unit of asset (that can be transferred from renewable resource); and spillover effect of consumption externality generated from saving or consuming every unit of renewable resource for social production determines the convergence of efficient capital accumulation to increase the total social production level if all individual utility is transferable from renewable resource consumption; in this case environmental taxation ultimately burdens on international consumption side.

Renewable Resources, Environmental Pollution, and International Migration

We develop a two-country model with two industries: the smokestack manufacturing industry, which generates pollution, and the transboundary renewable resource industry. With no trade, migration occurs from the foreign country, with lower manufacturing productivity, to the home country. If the gap in pollution abatement technology, which is superior in the home country, dominates the productivity gap, both countries gain from migration. Under a free trade equilibrium, we also show that if the marginal harvest of the resource industry is lower (higher) than marginal damage of manufacturing in the home (foreign) country, migration still causes positive effects on the stock of renewable resources, which should improve both countries' welfare.

A development curse: formal vs informal activities in resource-dependent economies

Purpose – The paper aims to examine the coexistence of formal and informal resource sectors in resource-dependent economies, whose production depends on an exhaustible (e.g. minerals) and a renewable resource stock (e.g. forest), respectively. It then examines the implications of declining mineral stocks on public revenues, labour movements between sectors, and economic growth in an attempt to elucidate the poor economic performance of many mineral-dependent countries. Design/methodology/approach – The paper presents a theoretical model that describes the coexistence of a formal and informal resource-dependent sector, where individuals can direct their work effort. It then assesses how declining mineral stocks influence labour mobility across sectors and environmental degradation. Findings – Decreasing mineral stocks induce a relocation of labour towards informal production and deprive local authorities from public revenues collected within the formal economy. This constrains the ability to improve infrastructure and welfare over time and simultaneously imposes pressure on the local environment. Originality/value – The paper provides a novel theoretical mechanism that attempts to elucidate the “resource curse”, i.e. the poor economic performance of many mineral-rich economies. It purposely explores the implications of a coexistence of formal and informal resource activities on economic development for resource-dependent economies, in order to obtain new insights into this direction.

Harvesting, census timing and “hidden” hydra effects

Population control in some form of harvesting might be expected to reduce population size, but quite the opposite can happen due to the hydra effect. This phenomenon describes an increase in population size with increased mortality. One mechanism causing hydra effects is the temporal separation of (i) harvesting and (ii) density-dependent reproduction. Here we consider discrete-time models of these two processes. It is commonly believed that harvesting needs to precede reproduction for a hydra effect to occur. We show that, by contrast, hydra effects also take place for harvest after reproduction. Due to the timing of population census, however, the hydra effect will not be measured and thus remains ‘hidden’. As a consequence, managers may miss out on the opportunity to increase both the yield and the remaining stock of renewable resources. If harvesting aims at controlling pest species, management interventions may backfire in the sense that the pest increases rather than decreases—and, to make things even worse, this may actually go unnoticed. To remedy these undesirable consequences, we propose a modelling framework that can reveal hidden hydra effects. Our results are based on rigorous mathematical proofs that the order of two events does not matter for standard harvesting/hunting strategies.

On the optimal timing of switching from non-renewable to renewable resources: dirty vs clean energy sources and the relative efficiency of generators

We develop a model on the optimal timing of switching from non-renewable to renewable energy sources with endogenous extraction choices under emission taxes and abatement costs. We assume that non-renewable resources are dirty inputs and create environmental degradation, while renewable resources are more environmentally friendly, although they may be more or less productive than the exhaustible resources. The value of the switching option from non-renewable to renewable resources is characterized. Numerical applications show that an increase in emission taxes, abatement costs or demand elasticity slows down the adoption of substitutable renewable resources, while an increase in the natural rate of resource regeneration, the stock of renewable resources or the relative productivity parameter speeds up the investment in the green technology.

On the Optimal Timing of Switching from Non-Renewable to Renewable Resources: Dirty vs Clean Energy Sources and the Relative Efficiency of Generators

We develop a model on the optimal timing of switching from non-renewable to renewable energy sources with endogenous extraction choices under emission taxes, subsidies on renewable resources and abatement costs. We assume that non-renewable resources are dirty inputs and create environmental degradation, while renewable resources are more environmentally friendly, although they may be more or less productive than the exhaustible resources. The value of the switching option from non-renewable to renewable resources is characterized. Numerical applications show that an increase in emission taxes, abatement costs or demand elasticity slows down the adoption of substitutable renewable resources, while an increase in the natural rate of resource regeneration, the stock of renewable resources or the relative productivity parameter speeds up the investment in the green technology.

COMPETITION AND COOPERATION IN A DYNAMICAL MODEL OF NATURAL RESOURCES

In this paper, we propose a model describing the commercial exploitation of a common renewable resource by a population of strategically interacting agents. Players can cooperate or compete; cooperators maximize the payoff of their group while defectors maximize their own profit. The partition of the players into two groups, defectors and cooperators, results from the players' choices, so it is not predetermined. This partition is decided as a Nash equilibrium of a static game. It is shown that different types of players can exist in an equilibrium; more precisely, depending on the parameter values such as resource stock, cost, and so on, there might be equilibria only with defectors, cooperators, or with a combination of cooperators and defectors. In any case the total harvest depends on the renewable resource stock, so it influences agents' positions. It is assumed that at each time period the agents harvest according to Nash equilibrium, which can be combined with a dynamic model describing the evolution of fish population. A complete analysis of the equilibria is presented and their stability is analysed. The effect of the different Nash equilibria on the stability of the fish stock, showing that full cooperation is the most stable case, is examined.