Managing Invasive Species in the Presence of Endogenous Technological Change with Uncertainty

Abstract

This research incorporates the development and adoption of an induced technology under uncertainty into a conceptual dynamic model to more broadly examine efficient policies for mitigating invasive species infestations. We find that under optimal policy, marginal costs of adopting conventional control measures are equal to the sum of the marginal benefits from development and adoption of new technology, as well as the use of conventional control measures. This result implies that a resource allocation designed for controlling invasive species is not adequate when an induced technology is not considered. Our results also reveal that the shadow values associated with the probabilities of developing and then adopting an induced technology increase as the shadow values associated with the stock of an invasive species population increase.

Optimal Policies for Managing Invasive Species under Uncertainty

“…Hazard-function methods have been employed within dynamic economic frameworks under uncertainties where temporal considerations matter [9], as in the case of the uncertain entry time of firms within an industry [10], the uncertain discovery time of an invasive species [1], the uncertain timing of an innovation from public/private research investments [4,9], and uncertainty in the timing of adoption of a new technology [4,11]. Uncertainties enter our economic model with respect to the timing of the discovery of an invasive pest, the development of an induced technology designed to reduce management costs, and adoption of an induced technology by producers.…”

“…To examine this issue, we extend the recent work by Kim et al [4] addressing management of invasive species in the presence of endogenous technological change with uncertainty by incorporating preventive measures before the discovery of an invasive species [1]. Technical change we focus on is often the outcome of joint research across government, academic and corporate enterprises, aimed at the development of a pest-induced technology innovation typically associated with a factor of production such as genetically engineered "Roundup Ready" seeds currently available for corn, soybean, cotton, and other crops.…”

“…While manageability of economic and ecological damages due to invasive species depends largely on available control technologies, little attention has been paid to the effect of induced technical change and farmer adoption of new control technologies on the resource allocation for adopting conventional control measures [4]. As the costs of control drastically increase during the initial establishment and dispersion phase, new technologies can be developed in stage 2, and then adopted in response to an increase in management costs in stage 3.…”

“…In stage 3, however, some farmers may employ conventional control measures to mitigate the invasive species infestation, while other farmers may adopt the newly developed technology. Failure to consider induced technology in stage 2 and its adoption in stage 3 can lead not only to inefficient resource allocation for controlling invasive species during management stage 2 [4], but also to counterproductive policy recommendations [5].…”

“…Optimal policy recommendations in managing invasive species have been based on sub-structured models; either stage 2 only [6], or both stages 1 and 2 [1,2,7,8], or both stages 2 and 3 [4,8]. However, to our knowledge, a fully structured model covering all three stages of managing invasive species has not been presented in the literature.…”