Cod Today and None Tomorrow: The Economic Value of a Marine Reserve

Using data from what was once one of the world’s largest capture fisheries, the northern cod fishery, the economic value of a marine reserve is calculated using a stochastic optimal control model with a jump-diffusion process. Counterfactual analysis shows that with a stochastic environment an optim...

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Bibliographic Details
Published in:Land economics 2009-08, Vol.85 (3), p.454-469
Main Authors: Grafton, R. Quentin, Kompas, Tom, Van Ha, Pham
Format: Article
Language:English
Subjects:
Biomass
Economic benefits
Economic value
Environment
Fisheries
Fisheries management
Fishery collapse
Fishery economics
Fishery resources
Fishing
Land economics
Marine resources
Nature reserves
Ocean fisheries
Sea
Stochastic models
Studies
Sustainable fisheries management
Value analysis
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Summary:Using data from what was once one of the world’s largest capture fisheries, the northern cod fishery, the economic value of a marine reserve is calculated using a stochastic optimal control model with a jump-diffusion process. Counterfactual analysis shows that with a stochastic environment an optimal-sized marine reserve in this fishery would have prevented the fishery’s collapse and generated a triple payoff: raising resource rents even if harvesting was "optimal"; decreasing recovery time for the biomass to return to its former state, smoothing fishers’ harvests and resource rents; and lowering the chance of a catastrophic collapse following a negative shock. (JEL Q22, Q57)
ISSN:0023-7639
1543-8325
DOI:10.3368/le.85.3.454