Economics of sustainable resource management in a dynamic optimization framework

Piyali Talukdar, University of Rhode Island

Abstract

The focus of land policy in the United States is shifting emphasis toward ecosystem structure, function and health, rather than focusing on the direct produce of individual ecosystems. Yet managing a whole ecosystem remains challenging, especially when independent economic decision makers may have different and often conflicting interests affecting the same ecosystem.^ The present research is an investigation of the effects of individual economic decisions on ecosystem structure and function and the valuation of forest ecosystem components. Land ownership and ecosystem boundaries rarely coincide, so that the actions and interactions of various landowners will ultimately define forest ecosystem conditions. While stressing the importance of ecological interactions among various components of the forest ecosystem, a dynamic optimization model is developed to examine management decisions and interactions among various landowners. Since adjacent lands are ecologically linked, ecological benefits will depend on the actions of neighboring landowners. The analysis uses a "socially optimum harvest pattern" as a practical and credible benchmark of sustainability against which individual landowners can assess their forest management practice. The term "sustainability" is used to emphasize that the socially optimum harvest pattern recommends an optimum harvest schedule that utilizes the timber and non-timber resources by allowing them to go on renewing themselves indefinitely.^ An applied game theoretic analysis focuses on the economic and biological consequences of individual landowner's harvest pattern over time on the forest ecosystem. In the framework the possibility is discussed where landowners choose their individual harvest patterns without communication or cooperation among themselves. The analysis then shows the benefits of communication and cooperation among landowners in terms of economic payoffs as well as environmental sustainability. It is shown that the motivation exists for landowners to try to cooperate voluntarily. It is also shown that in the absence of communication, a classical scheme of per unit subsidies can be successful, at least at the conceptual level, in equating social and individual benefits. This research develops insights to formulate forest management policy in terms of long-run sustained flow of both timber and non-timber benefits from the ecosystem and to define hypotheses for future studies. ^

Subject Area

Economics, General|Economics, Agricultural|Environmental Sciences|Urban and Regional Planning

Recommended Citation

Piyali Talukdar, "Economics of sustainable resource management in a dynamic optimization framework" (1996). Dissertations and Master's Theses (Campus Access). Paper AAI9723575.
http://digitalcommons.uri.edu/dissertations/AAI9723575

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