Journal Article

Optimal management of a stochastically varying population when policy adjustment is costly

James N. Sanchirico, Jacob LaRiviere, Michael Bode, Boettiger, Carl, Alan Hastings, Paul R. Armsworth

2016

Overview

Ecological systems are dynamic and policies to manage them need to respond to that variation. However, policy adjustments will sometimes be costly, which means that fine‐tuning a policy to track variability in the environment very tightly will only sometimes be worthwhile. We use a classic fisheries management problem, how to manage a stochastically varying population using annually varying quotas in order to maximize profit, to examine how costs of policy adjustment change optimal management recommendations. Costs of policy adjustment (changes in fishing quotas through time) could take different forms. For example, these costs may respond to the size of the change being implemented, or there could be a fixed cost any time a quota change is made. We show how different forms of policy costs have contrasting implications for optimal policies. Though it is frequently assumed that costs to adjusting policies will dampen variation in the policy, we show that certain cost structures can actually increase variation through time. We further show that failing to account for adjustment costs has a consistently worse economic impact than would assuming these costs are present when they are not.

• Publisher: Ecological Society of America,ECOLOGICAL SOCIETY OF AMERICA
• Subject: adjustment costs / Animals / ecological management / economic impact / fisheries / Fisheries - economics / Fisheries - legislation & jurisprudence / fisheries management / Fishes - physiology / issues and policy / Models, Biological / optimal control / Population Dynamics / Public Policy / Stochastic Processes / Time Factors