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Lecture 10

Lecture 10. The efficient and optimal use of renewable resources. What are renewable resources?. Examples: Renewable stock resources : fishery, forestry, water, wildlife, arable land, grazing land, soil, anti-biotic and pesticide resistance

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Lecture 10

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  1. Lecture 10 The efficient and optimal use of renewable resources

  2. What are renewable resources? • Examples: • Renewable stock resources: fishery, forestry, water, wildlife, arable land, grazing land, soil, anti-biotic and pesticide resistance • Renewable flow resources: solar, wave, wind, and geothermal energy • We consider only renewable stock resources

  3. Biological growth processes for renewable resources • Change of population over time: • Stock level at any point in time:

  4. Integration of the growth process

  5. Integration of the growth process

  6. Growth Function

  7. Where is the maximum growth rate?

  8. Logistic biological growth function G(S) S S 0 S MSY MAX

  9. Logistic biological growth function with threshold level

  10. Logistic biological growth function with depensation

  11. Logistic biological growth function with critical depensation

  12. Steady-State Harvesting

  13. Figure 17.2 Steady-state harvests (Perman et al.: page 560) G = H MSY MSY G = H 1 1 0 S S 1L 1U MAX MSY S S

  14. Open access resource: fishery as a case

  15. Static analysis of a renewable resource harvesting

  16. Costs and benefits of harvesting

  17. Bio-economic equilibrium

  18. Open-access steady-state equilibrium bio-economic equilibrium

  19. Open-access steady-state equilibrium

  20. HMSY = eEMSYS H1 = eE1S H2 = eE2S H2 H1 S1 SMSY =SMAX/2 S2 S Steady-state equilibrium fish harvests and stocks at various effort levels

  21. HPP H=(w/P)E HOA EOA E Steady-state equilibrium yield-effort relationship zero economic profit equilibrium

  22. Steady-state harvesting: private property

  23. Steady-state harvesting: private property in steady state dp/dt = 0 difference between market price and marginal costs of an incremental unit of harvested fish reduction in total harvesting costs, by having one more unit of resource, additional fish grows by dG/dS value at the net-price profit foregone not harvesting) marginal cost of investment marginal benefit of investment

  24. Steady-state harvesting: private property

  25. Steady-state harvesting: private property the value of the reduction in harvesting costs that arises from a marginal increase in the resource stock natural rate of growth in the stock from a marginal change in stock size opportunity costs fundamental equation of renewable resources

  26. Renewable Resource Policies • 1. Command and Control • reducing fishing effort • restriction on fishing gear • spatial restrictions • fleet size reduction • quantity restrictions on catch

  27. Where the forests go

  28. Community ownership and administration of forests

  29. Forestry Funds

  30. A possible global forest situation: 2050

  31. A single rotation forest model • Stand of timber of uniform type and age • All trees are planted at the same time • All trees are to be cut at the same time • Once felled the forest will not be replanted • The land has no alternative uses: • All costs and prices are constant • The forest generates only timber as a value, other possible values are ignored • Felling of the forest has no external effects

  32. A single rotation forest model

  33. Maximisation of profit present value

  34. Maximisation of profit present value

  35. Example

  36. Figure 18.1 (a) The volume of timber in a single stand over time (Perman et al., page 603)

  37. Figure 18.2 Present values of net benefits at i = 0.00 (NB1) and i = 0.03 (NB2)(Perman et al.: page 606)

  38. Figure 18.3Variation of the optimal felling age with the interest rate, for a single-rotation forest (Perman et al.: page 607)

  39. Infinite rotation forestry models

  40. Infinite rotation forestry models: NPV

  41. Infinite rotation forestry models: NPV

  42. Infinite rotation forestry models: NPV

  43. Infinite rotation forestry models: NPV

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