Informal insurance in renewable resource harvesting

Abstract

SummaryA general equilibrium model is presented where a small number of resource users share part of their harvests with each other. As the productivity of resource harvest is stochastic, the sharing rule can be interpreted as an informal insurance contract. As individual labour inputs are unobservable, an exogenous increase in the insurance premium causes individuals to expend less effort on harvesting. However, the resulting inefficiency is reduced by an increase in the expected long-run level of the resource stock. A second-best efficient level of sharing exists, which is positive but smaller than the first-best level if the resource stock per capita is small.

Assessing Marine Resource Exploitation in Lofanga, Tonga: One Case Study—Two Approaches

“…A need for cash income is conceded, but a major part of this cash is assumed to be used for social obligations, thus emphasizing traditional values rather than weakening them. With regard to resource exploitation we proposed that, while institutions seem to be necessary to protect open access resources (Feeny et al, 1990), solidarity networks within communities may substitute for access regulations (Chakraborty, 2002(Chakraborty, , 2004. Overexploitation, if occurring at all, may then result from socially defined needs and competition aggravated by structural traps.…”

Sharing rules and the commons: evidence from Ha'apai, Tonga

“…Direct restrictions define who is allowed to enter the resource system at what times. Sharing rules can be interpreted as an informal insurance system that protects fishermen against random fluctuations in fishing yields (Bender, Kägi, and Mohr, 2002;Chakraborty, 2002). These restrictions are called access restrictions here.…”