Optimal Ecosystem Management When Species Compete for Limiting Resources

Posted: 24 Feb 2001

See all articles by William A. Brock

William A. Brock

University of Wisconsin, Madison - Department of Economics; University of Missouri at Columbia - Department of Economics

Anastasios Xepapadeas

Athens University of Economics and Business; University of Bologna - School of Economics, Management, and Statistics

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Abstract

Resource-based models of species competition have been introduced recently as an alternative to the classical theory based on the Lotca-Volterra methodological approach to species competition. We consider economic management of an ecosystem for a Tilman model of mechanistic resource-based species competition where the growth of species is limited by resource availability. We analyse the equilibrium ecosystem state resulting from Nature's equilibrium, and two basic management problems: the privately optimal management problem and the socially optimal management problem. Under private optimization agents do not take into account externalities associated with the effects of their management practices on ecosystem service flows, while these effects are accounted for at the socially optimal management. We show that in general three different equilibrium species specialization patterns emerge, we completely characterize these patterns for the ecological/economic model with linear structure, and we provide policy rules so that the privately optimal state could be driven towards the socially optimal or the natural equilibrium. We also develop an approach for unifying equilibrium price theory with Tilman ecological modelling and we prove the existence and analyse the stability of a price equilibrium for a stochastic discrete choice model of species specialization. Finally we discuss equilibrium specialization and policy issues for a generalized model where species and resources interact among themselves, as a conceptual basis for incorporating detailed ecological modelling into economic management.

JEL Classification: Q0, Q2

Suggested Citation

Brock, William A. and Xepapadeas, Anastasios, Optimal Ecosystem Management When Species Compete for Limiting Resources. Available at SSRN: https://ssrn.com/abstract=254416

William A. Brock

University of Wisconsin, Madison - Department of Economics ( email )

1180 Observatory Drive
Madison, WI 53706
United States
608-263-6655 (Phone)
608-263-3876 (Fax)

University of Missouri at Columbia - Department of Economics ( email )

118 Professional Building
Columbia, MO 65211
United States

Anastasios Xepapadeas (Contact Author)

Athens University of Economics and Business ( email )

76 Patission Street
Athens, 104 34
Greece

University of Bologna - School of Economics, Management, and Statistics ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy

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