The Premium of Marine Protected Areas: A Simple Valuation Model

Marine Resource Economics, Vol. 23, pp. 171-197, 2008

Posted: 6 Feb 2010

See all articles by Sturla Kvamsdal

Sturla Kvamsdal

Norwegian School of Economics (NHH)

Leif Kristoffer Sandal

Norwegian School of Economics (NHH) - Department of Business and Management Science

Date Written: March 28, 2007

Abstract

Marine Protected Areas are considered as a hedging tool against some of the uncertainties that trouble many fisheries today. Such tools are always connected with a cost; a premium. An optimal harvest rule is combined with a protected area to manage a fishery. The model ignores uncertainty, and is thus ideal to analyze the induced cost arising from protected areas. We address the premium by comparing settings where only an optimal harvesting policy is implemented and where the combined management tool is used. The premium is found to be increasing and convex as a function of the degree of protection. Concepts of relative growth efficiency, relative biological gain, and biological efficiency are all introduced to increase the understanding of the management tool and its effects on the bioeconomic system. Time series solutions show that the net return per unit of fish increases after the protected area is established.

Keywords: Bioeconomics, Dynamic programming, Fisheries management

JEL Classification: C61, Q22, Q57

Suggested Citation

Kvamsdal, Sturla and Sandal, Leif Kristoffer, The Premium of Marine Protected Areas: A Simple Valuation Model (March 28, 2007). Marine Resource Economics, Vol. 23, pp. 171-197, 2008 , Available at SSRN: https://ssrn.com/abstract=1548426

Sturla Kvamsdal (Contact Author)

Norwegian School of Economics (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway

Leif Kristoffer Sandal

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway
+47 55 95 93 41 (Phone)

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