Global Warming and International Fishery Management: Does Anticipation of the Temperature Change Matter?

20 Pages Posted: 7 Feb 2011

See all articles by Xiaozi Liu

Xiaozi Liu

Norwegian School of Economics (NHH) - Department of Finance

Mikko Heino

University of Bergen - Department of Biology

Date Written: December 30, 2010

Abstract

This paper investigates the effects of climate-induced rising of ocean temperature on the optimal fishing policies in a two players non-cooperative game setting. We compare reactive management, under which the manager does not believe in or know about temperature trend, with proactive management where the manager considers the future temperature change in his decisions. We assume that the fish stock is initially solely owned by country one. As temperature rises, the stock starts spilling over to the zone of the other country and eventually becomes under its sole ownership. A stochastic dynamic programming model is developed to identify Nash management strategies for the two players. The main findings are that anticipation of temperature trend induces notable strategic interactions between two players. Knowing that it is gradually loosing the stock, country one is often harvesting more aggressively, whereas the country that is increasing its ownership harvests more conservatively. Compared to reactive management, proactive management benefits both parties in terms of their cumulative pay-offs; the biological stock is also larger much of the time. In most cases, the difference between two management regimes is subtle, but when the stock is slow-growing and highly schooling, proactive management may save it from collapse.

Keywords: Climate Change, Nash Game, Stochastic Dynamic Programming, Optimal Fishing Policy

Suggested Citation

Liu, Xiaozi and Heino, Mikko, Global Warming and International Fishery Management: Does Anticipation of the Temperature Change Matter? (December 30, 2010). NHH Dept. of Finance & Management Science Discussion Paper No. 2010/19, Available at SSRN: https://ssrn.com/abstract=1754932 or http://dx.doi.org/10.2139/ssrn.1754932

Xiaozi Liu (Contact Author)

Norwegian School of Economics (NHH) - Department of Finance ( email )

Helleveien 30
N-5045 Bergen
Norway

Mikko Heino

University of Bergen - Department of Biology ( email )

Mus├ęplassen 1
N-5008 Bergen, +47 55 58
Norway

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