We analyze how the threat of a potential future regime shift affects optimal management. We use a simple general growth model to analyze four cases that involve combinations of stock collapse versus changes in system dynamics, and exogenous versus endogenous probabilities of regime shift. Prior work in economics has focused on stock collapse with endogenous probabilities and reaches ambiguous conclusions on whether the potential for regime shift will increase or decrease intensity of resource use and level of resource stock. We show that all other cases yield unambiguous results. In particular, with endogenous probability of regime shift that affects system dynamics the potential for regime shift causes optimal management to become precautionary in the sense of maintaining higher resource stock levels.
Machine generated contents note: PART I FRAMEWORK FOR ANALYSIS OF CONSERVATION POLICY -- 1 Martin L. Weitzman (1998), 'The Noah's Ark Problem', Econometrica, 66, pp. 1279-98. -- 2 Stephen Polasky and Andrew R. Solow (1999), 'Conserving Biological Diversity with Scarce Resources', in J. Klopatek and R. Gardner (eds), Landscape -- Ecological Analysis: Issues and Applications, New York: Springer-Verlag, pp. 154-74. -- PART II THE VALUE OF BIOLOGICAL DIVERSITY -- Biodiversity Measures -- 3 Daniel P. Faith (1992), 'Conservation Evaluation and Phylogenetic Diversity', Biological Conservation, 61, pp. 1-10. -- 4 Martin L. Weitzman (1992), 'On Diversity', Quarterly Journal of Economics, 107, pp. 363-405. -- 5 Andrew R. Solow and Stephen Polasky (1994), 'Measuring Biological Diversity', Environmental and Ecological Statistics, 1, pp. 95-107. -- Bioprospecting -- 6 R. David Simpson, Roger A. Sedjo and Johm W. Reid (1996), 'Valuing Biodiversity for Use in Pharmaceutical Research', Journal of Political Economy, 104, pp. 163-85. -- 7 Gordon C. Rausser and Arthur A. Small (20D00), 'Valuing Research Leads:Bioprospecting and the Conservation of Genetic Resources', Journal of Political Economy, 108, pp. 173-206. -- 8 Douglas GoBin, Melinda Smale and Bent Skovmand (2000), 'Searching an Ex Situ Collection of Wheat Genetic Resources.', American Journal ofAgricuitural Economics, $2, pp. 812-27. -- Ecosystem Services -- 9 David Tilman (1999), 'The Ecological Consaequences of Changes in Biodiv*ersity: -- A Search for General Principles', Ecology, 80, pp. 1455-74. 10 Charles Perrings and Brian Walker (1997), 'Biodiversity, Resilience and the Control of Ecological-Economic Systems: The Case of Fire-Driven Rangelands', Ecological Economics, 22, pp. 73-83. -- 11 Edward B. Barbier (1994), 'Valuing Environmental Functions: Tropical Wetlands', Land Economics, 70, pp. 155-73. -- Existemce Values -- 12 John B. Loomis and Douglas S. White (1996), 'Economic Benefits of Rare and Endangered Species: Summary and Meta-analysis', Ecological Economics, 18, pp- 197-206. -- 13 Thomas H. Stevens, Jaime Echeverria, Ronald J. Glass, Tim Hager and Thomas -- A. More (1991), 'Measuring the Existence Value of Wildlife: What Do CVM -- Estimates Really Show?', Land Economics, 67, pp. 390-400. -- PART III CONSERVATION STRATEGIES -- Land Use and the Opportunity Cost of Conservation -- 14 Amy Ando, Jeffrey Camm, Stephen Polasky and Andrew Solow (1998), 'Species Distributions, Land Values, and Efficient Conservation', Science, 279, pp- 2126-28. -- 15 Claire A. Montgomery, Robert A. Pollak, Kathryn Freemark and Denis White -- (1999), 'Pricing Biodiversity', Journal of Environmental Economics and -- Management, 38, pp. 1-19. -- 16 Claire A. Montgomery, Gardner M. Brown, Jr. and Darius M. Adams (1994), -- 'The Marginal Cost of Species Preservation: The Northern Spotted Owl', Journal -- of Environmental Economics and Management, 26, pp. 111-28. -- The US Endangered Species Act -- 17 Robert P. Berrens, David S. Brookshire, Michael McKee and Christian Schmidt -- (1998), 'Implementing the Safe Minimum Standard Approach: Two Case Studies -- from the U.S. Endangered Species Act', Land Economics, 74, pp. 147-61. -- 18 Andrew Metrick and Martin L. Weitzman (1996), 'Patterns of Behavior in -- Endangered Species Preservation', Land Economics, 72, pp. 1-16. -- 19 Stephen Polasky and Holly Doremus (1998), 'When the Truth Hurts: Endangered -- Species Policy on Private Land with Imperfect Information', Journal of -- Environmental Economics and Management, 35, pp. 22-47. -- Conservation Strategies in Developing Countries -- 20 Michael Kremer and Charles Morcom (2000), 'Elephants', American Economic -- Review, 90, pp. 212-34. -- 21 Christopher B. Barrett and Peter Arcese (1998), 'Wildlife Harvest in Integrated -- Conservation and Development Projects: Linking Harvest to Household Demand, -- Agricultural Production, and Environmental Shocks in the Serengeti', Land -- Economics, 74, pp. 449-65. -- 22 Edward B. Barbier and Michael Rauscher (1994), 'Trade, Tropical Deforestation -- and Policy Interventions', Environmental and Resource Economics, 4, pp. 75-90. -- 23 Robert T. Deacon and Paul Murphy (1997), 'The Structure of an Environmental -- Transaction: The Debt-for-Nature Swap', Land Economics, 73, pp. 1-24
"This ninth edition of Economics and the Environment is the third to include Dr. Stephen Polasky as a coauthor, who has brought to the text a reworked and stronger focus on natural resource economics and ecosystem services. This book was first published almost 30 years ago in 1992, as the Rio Earth Summit was concluding. Global warming had been brought to national and global attention only 4 years previous by James Hansen's famous congressional testimony. The first President Bush would soon sign the UN Framework Convention on Climate Change. At the time, in the atmosphere stood at 356 parts per million. Twenty-five years later, levels are over 410 parts per million and climbing. Climate change remains front and center, now understood less as an environmental problem than as a challenge to civilization. As in the first edition, global warming remains the topic that launches the book and provides the framing example for a comprehensive look at environmental economics. With Steve's help, the book now provides a stronger resource and ecosystem processes lens for exploring climate change and other critical environmental issues."
