Spatial Renewable Resource Extraction under Possible Regime Shift

Abstract

How will countries harvesting mobile natural resources react to the possibility of regime shift? We address the non-cooperative exploitation of a migratory renewable resource in the presence of possible regime shift that affects its movement. Motivated by the anticipated effects of climate change, we model a regime shift that will alter the spatial movement patterns of the resource at some point in the future. We develop a stochastic spatial bioeconomic model to address the effects of this class of regime shift on non-cooperative harvest decisions made by decentralized owners such as countries exploiting a migratory fish or other natural resource stock. We find that the threat of a future shift modifies the standard golden rule and may induce more aggressive harvest everywhere, irrespective of whether the owner will be advantaged or disadvantaged by the shift. We also identify conditions under which the threat of regime shift induces owners to reduce harvest rates in advance of the shift. Our analysis suggests that different property rights structures (single ownership vs common property) or heterogeneous growth can give rise to previously unexplored incentives and can even reverse conventional wisdom about how countries will react to the prospect of future environmental change.

On Competition for Spatially Distributed Resources in Networks: An Extended Version

“…Our paper is naturally related to the metapopulation literature (Hanski, 1999;Sanchirico and Wilen, 2005;Smith et al, 2009;Costello and Polaski, 2008, and others). A few papers in this stream have explored aspects of the problem of dynamic strategic interaction with distributed and moving resources, especially to evaluate whether management of the resources through a system of Territorial Use Rights (Territorial Use Right for Fishing, or "TURF", in the case of fisheries) can effectively mitigate the "tragedy of the commons" (see e.g., Kaffine and Costello, 2011, Costello et al, 2015, Herrera et al, 2016, Costello and Kaffine, 2018, Costello et al, 2019, de Frutos and Martin-Herran, 2019, Fabbri et al, 2020. For example, Kaffine and Costello (2011) have shown, using a discrete time model, that Territorial Use Rights coupled with profits sharing can effectively mitigate the overexploitation of moving resources.…”

On Competition for Spatially Distributed Resources on Networks

“…A small literature has explored aspects of the problem of dynamic strategic interaction with distributed and moving resources, especially in order to evaluate whether management of the resources through a system of Territorial Use Rights (TURF for fisheries) can effectively mitigate the "tragedy of the commons" (see e.g., Kaffine and Costello, 2011, Costello et al, 2015, Herrera et al, 2016, Costello and Kaffine, 2018, Costello et al, 2019, de Frutos and Martin-Herran, 2019, Fabbri et al, 2020. For example, Kaffine and Costello (2011) have shown, using a discrete time model, that Territorial Use Rights coupled with profits sharing can effectively reduce overexploitation of moving resources.…”

Policy effectiveness in spatial resource wars: A two-region model

“…Clearly, these assumptions are not well suited to the analysis of the spatial externalities that arise when the resource is a moving spatial distributed stock but access is restricted to a small number of extractors. As a consequence, there are still very few studies that contain analytically or numerically tractable dynamic games (Bhat and Huffaker, 2007;Kaffine and Costello, 2011;Herrera, Moeller and Neubert, 2016, Costello, Nkuiya and Quérou, 2019, Quérou, Costello and Tomini, 2018, de Frutos and Martin Herran, 2019.…”

“…Our model is a spatial generalization of the classical Levhari and Mirman (1980) example of a "fish war" 2 and is closest to the models in Herrera, Moeller and Neubert (2016) and Kaffine and Costello (2011) (also used in Costello, Quérou and Tomini, 2015, Quérou, Costello and Tomini, 2018, Costello, Nkuiya and Quérou, 2019, which use perfect Nash equilibria in the context of mobile spatially distributed stocks. There are still some relevant differences:…”