Macroeconomics

Introduction

•  This chapter examines renewable

resources with biological growth.

•  This chapter focuses on common pool

resources (fisheries).

•  An economic model is integrated with a

biological model.

•  Efficient levels of harvest are defined and

economic incentives for sustainable

harvests are discussed.

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Objectives

•  Present the Schaefer model.

•  Define static-efficient sustainable yield.

•  Discuss the difference between the open-access

and static-efficient outcome.

•  Present and discuss dynamic efficiency and the

effect of the discount rate.

•  Discuss the two types of externalities created

with free-access.

•  Present public policy options for fisheries

management and the pros and cons of each

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option.

Efficient Allocations

Biological Dimension—The Schaefer model

•  The Schaefer model posits an average

relationship between the growth of the fish

population and the size of the fish

population.

•  The shape of the graph (Figure 14.1)

shows the range of population sizes where

population growth leads to population

increases and a range where population

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growth will lead to stock decreases.

FIGURE 14.1 Relationship between

the Fish Population and Growth

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Static Efficient Sustainable Yield

•  The static-efficient sustainable yield is the catch

level that, if maintained perpetually, would

produce the largest annual net benefit.

•  Assumptions of the economic model are:

–  The price of fish is constant and does not depend on

the amount sold.

–  The marginal cost of a unit of fishing effort is constant.

–  The amount of fish caught per unit of effort expended

is proportional to the size of the fish population.

•  The static-efficient sustainable yield allocation

maximizes the constant net benefit.

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FIGURE 14.2

Efficient Sustainable Yield for a Fishery

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Dynamic Efficient Sustainable Yield

•  The dynamic-efficient sustainable yield

incorporates discounting.

–  The dynamic...