Renewable resources assignment
Figure 1: The sustainable yield curve for north Atlantic cod. Pf= price of fish, and total private cost is the cost of a sustainable harvest at a given stock.
- Label the minimum viable population, the maximum sustainable yield, the open access harvest equilibrium, and the annual sustainable profit maximizing harvest.
- If the fishery is open access but at the profit maximizing level, explain why the invisible hand will guide it towards the open access equilibrium.
- Assume a single profit-maximizing owner controls the resource. At some point, fish grow faster than money in the bank. In what region of the graph would she favor harvesting? What would happen if the rate of reproduction were lower than returns on the stock market, and the cost of harvest was falling over time?
- What happens to the open access equilibrium, the annual sustainable profit maximizing harvest, and the dynamic profit maximizing harvest if the price of fish goes up?
- Assume the fishery is effectively managed under a global common property regime. The management goal is to optimize the combined value of fish harvests and ecosystem services. In what region of the graph would harvests occur, and why?
